Taxation and our total economic contribution to public finances 2015-16 Vodafone Group Plc Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Taxation and our total Contents economic contribution to public finances 2015-16

Tax and our total contribution 3 Our contribution, 18 to public finances country by country Committed to transparency 4 Introduction 19 Overview 5 Country-by-country narrative reporting 22 Corporate responsibilities 6 Our contribution, country by country: and obligations Europe 23 Multinationals, governments and tax 8 Africa, Middle East and Asia-Pacific 33 Tax policy, conduct and Principles 9 Enterprise sales and 41 Vodafone, Luxembourg and ‘tax havens’ 10 marketing locations Why do we pay little or no 12 Other non-operating assets 50 UK Corporation Tax? Contributing to the development 14 Appendices 54 of tax policy 1. Country-by-country 55 Tax and emerging markets 16 contributions table 2. Key Group financials 58 and reconciliation 3. Verizon Wireless 59 4. Types of taxation 60 5. Glossary 61 6. Assurance statement 62

1 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Key figures 2015-16

Revenue Total economic contribution Other* 2% Indirect taxes Direct taxes Service revenue £5.3 billion £2.2 billion AMAP 32% £11.6 billion EBITDA 28.8% £11.4 Group effective tax rate £41.0 £1.8 billion billion profit before tax billion Total economic £7.7 billion Revenue billion contribution £8.6 (cash-paid basis) Spend on spectrum capital expenditure1 2013-2016

Service revenue Non-tax-based fees Europe £3.9 billion * Partner Markets and common functions 66%

Our business

462 47 13.4 38 25 million million million million million 300,000 mobile customers 4G customers fixed broadband IoT connections mobile money base stations customers customers

For more information, see our Annual Report and our Sustainable Business report.

1 See page 58 for a reconciliation to the numbers used elsewhere in this Report 2 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Taxation and our total economic contribution to public finances

Committed to transparency 4 Vodafone, Luxembourg Overview 5 and ‘tax havens’ 10 Corporate responsibilities Why do we pay little or and obligations 6 no UK Corporation Tax? 12 Multinationals, Contributing to the governments and tax 8 development of tax policy 14 Tax policy, conduct Tax and emerging markets 16 and Principles 9 3 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Committed to transparency

This is Vodafone’s fifth Taxation and from informed and fair policymaking and greater detail than the statutory information our total economic contribution to regulation, independent and respected presented in our Annual Report. public finances report since 2012. Five judicial systems, widespread prosperity shared The Taxation and our total economic across all groups in society and a strong contribution to public finances report years on, the Report remains the most bond of trust between the governed and the comprehensive publication of its kind has evolved over the last five years, with governing. Contented citizens make for good increasing levels of disclosure and new in the global telecommunications and customers and a society at ease with itself information added at each iteration. We now technology sectors and is a cornerstone is an attractive destination for any investor include narrative reporting for all countries in of Vodafone’s broader commitment to seeking reliable returns over the long term. which Vodafone has a separate legal entity – corporate transparency. We therefore believe that increasing public including the smallest of our non-operating Individual countries’ tax regimes and understanding of, and trust in, the tax system subsidiaries – together with the relevant international taxation norms can be is strongly in the interests of every business. financial data. We have also updated our complicated, frequently opaque from a Central to that belief is the principle that global tax risk management policy, strategy non-specialist’s perspective and – at worst – Vodafone will act with integrity in all matters and Principles this year. wholly incomprehensible to the wider public. related to tax, including a policy of full Much of the content of the Report has been That complexity and paucity of understanding transparency with all tax authorities and a shaped by discussions with a wide range is a problem because taxation matters a great commitment that we will always pay all of stakeholders across industry, politics, deal, for two reasons. First, if governments taxes properly due under the law wherever tax authorities, international NGOs and tax cannot raise the revenue required to fund we operate. activists. We are grateful to all for their time public services and civil infrastructure, the This Report sets out our total contribution and insights. Several of those we spoke to consequences – in terms of social instability to public finances in all our countries of suggested that the current dataset disclosed and loss of productivity – can be severe. operation for the financial year 1 April 2015 in the country-by-country section (including Reliable public services are a fundamental to 31 March 2016. The gap in time between direct taxation, direct non-taxation and indirect part of ensuring a well-functioning society, the period under review and publication taxation revenues) would remain incomplete and those services require reliable sources reflects an important difference between this without the addition of total revenue and profit of funding, predominantly from government. Report and the statutory accounts published before tax in each country. We agree that this Second, the loss of public confidence in in our Annual Report in June 2016: the would enhance further our commitment to national and international tax regimes – financial contributions published here on a transparency on tax and have included those fuelled by a belief that the outcomes are country-by-country basis are reported on an numbers, for the first time, in this year’s Report. inequitable, favouring big companies over actual cash paid basis. In our view, a public small and rich over poor – has contributed to record of the amount of cash transferred from the erosion of trust in large companies and Vodafone to each country’s government is the (to some extent) the politicians whose policy highest form of transparency with no room for decisions shape those regimes. ambiguity as a consequence of accounting Nick Read treatments. However, it takes longer to Companies are most likely to succeed when Chief Financial Officer gather and reconcile this data as it goes into the markets in which they operate benefit Vodafone Group Plc 4 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Overview

In 2015-16, Vodafone’s turnover In 2015-16, we paid governments around the At a country level, our total contribution is was £41 billion, on which we made world more than £2.2 billion in cash in direct broadly in line with last year in the majority of a profit before tax of £1.8 billion. In taxes, raised £5.3 billion in cash on those our markets with some exceptions reflecting governments’ behalf in indirect taxes and paid local circumstances, such as increased cash terms, we contributed more than governments more than £3.9 billion in cash capital expenditure (and, therefore, capital £11.4 billion to the public finances via non-taxation-based revenue mechanisms allowances) or the effect of changes to local in our countries of operation, sharply such as payments for the right to use tax rules. higher than the £9.3 billion of cash spectrum. We also invested £8.9 billion in passed to governments in 2014-15. our network and services globally. The year-on-year increase is primarily Across the Group as a whole, our underlying £8.9 billion related to the result of spectrum effective tax rate (ETR) at the end of the expenditure in capital investment 2 auctions that took place in Germany, 2015-16 year was 28.8%. We therefore pay worldwide almost £3 in corporate tax for every £10 we Turkey and India. make in profit globally. The ETR excludes the Total capital expenditure – £bn one-off impact of the reorganisation of our Indian business which reduced the ETR on a 10 9.2 8.9 £11.4 billion statutory reporting basis for 2015-16. When in total contributions, in cash, to comparing our total profit before tax with our 8 governments across the markets total corporate taxes paid in cash terms, our 6.3 in which we operate ‘cash- paid’ ETR was even higher, at 37%. 6 5.2 5.3

Total contributions to governments 4 – £bn £2.2 billion paid in direct taxes, in cash, to governments 2 in our countries of operation 2.2 2012 2013 2014 2015 2016 5.3

3.9

Direct revenue contribution – tax Direct revenue contribution – non-tax Indirect revenue contribution

2 See page 58 for a reconciliation to the numbers used here and in the Annual Report 2016 5 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Corporate responsibilities and obligations

As explained earlier, we fully recognise the reasons we explain earlier, we believe paid by Vodafone’s operating businesses 3 Taxation is local that a commitment to the first is integral to every year. For context, Corporation Tax and value the benefits for society as a Taxes generally fall due wherever profits are the achievement of the second. accounts for only around 9%3 of total tax paid whole that arise from well-functioning generated. This means that the tax liabilities to the UK Exchequer and just under 20%4 of In a climate of growing public distrust, it can that arise as a result of any profits are decided taxation systems that command total taxes paid to the UK Exchequer by the be difficult to demonstrate beyond doubt that under the rules of the country that hosts public confidence. We are also UK’s largest 100 companies. It is seriously shareholder benefit and public benefit are not the business in question. Vodafone pays all committed to acting with integrity, misleading to conclude that a company’s mutually exclusive. That mistrust has partly taxes due under the law in each and every honesty and transparency in our tax corporation tax payments represent the total been fuelled by media reporting of aggressive country in which we have a legal entity. In of its direct tax contributions to a government. strategy, policies and practices. and artificial tax avoidance schemes – by 2015-16, those direct taxes paid amounted Among other obligations, companies are both companies and individuals – of a kind 2 Many corporate taxes are paid to a total of more than £2.2 billion in cash explicitly prohibited within Vodafone’s Tax required to act in the interests of their on profits, not on revenues terms, broadly in line with the amount paid in shareholders. Many companies’ shareholders Principles. It is also the case, though, that 2014-15. It is incorrect to assume that all of are pension funds and long-term investment public concern has arisen as a consequence If a company makes little or no profit, it the global profit of a multinational company funds seeking to maximise the income or of a lack of understanding of some of the will generally incur lower tax charges than is taxable in its country of domicile (£1.8 billion return on their investments. They expect the fundamental aspects of how tax liabilities another similar company with higher profits. and the UK respectively, in Vodafone’s case). companies they invest in to optimise their costs are assessed, charged and reported. What a This approach is common to almost all Each government in each country in which in order to maximise their returns to the people non-expert believes to be an example of a countries. Without it, companies enduring we operate will assess the appropriate tax and organisations who have entrusted them company ‘playing the system’ is often a result periods of low profitability would be faced with liability against our profit in that country with their money. Vodafone and other similar of the system operating exactly as designed. disproportionate tax demands and significant and raise a tax charge accordingly. In some large companies are predominantly owned Similarly, what seems at first glance to be disincentives for investment; in the worst cases, circumstances, this could lead to a company by pension and long-term investment funds. a ‘loophole’ is often the intended outcome they would be unable to afford to pay their tax being taxed twice on the same income, see How we run our businesses, therefore, directly of a deliberate policy choice by a current or bills at all and could be at risk of bankruptcy. the section below on double taxation. affects the financial wellbeing of millions of previous government. In addition, in some markets, other taxes that ordinary individual pensioners and savers. Below are five areas that are a common are levied on revenue (together with non- It would be incorrect, though, to assume that source of confusion. taxation-based contributions such as spectrum fees) have the effect of depressing profit and the interests of the individual shareholder are 1 ‘Corporation tax’ is not the same inevitably in conflict with the interests of the so reducing corporation tax liabilities. For as ‘all taxes paid by a company’ individual citizen. This is not a zero-sum game; context, Vodafone made a worldwide profit in our view, it is entirely possible to achieve Corporation tax is just one of numerous direct before tax (PBT) of £1.8 billion in 2015-16 an effective balance between a company’s taxes paid to governments by companies. As based on a total revenue of £41 billion, and responsibilities to society as a whole and its we set out in Appendix 4, corporation tax is it is the PBT of £1.8 billion which determines obligations to its shareholders. Indeed, for one of almost 70 different corporate taxes many of the taxes we pay, not our revenue.

3 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/584767/Dec16_Receipts_NS_Bulletin_Final.pdf 4 http://www.pwc.co.uk/total-tax-contribution-100-group/index.jhtml 6 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

4 Taxation is not the only route sources exceeded £3.9 billion in cash terms. overall fiscal programme. These are therefore used by governments to raise £3.9 billion This was £2.6 billion higher than the figure for carefully scrutinised and methodical policy revenue from businesses 2014-15 as a result of spectrum auctions in choices – not accidental loopholes in any contributed in cash, in non-taxation-based Germany, India and Turkey. sense – and they have the effect of reducing revenue to governments Governments also use other mechanisms tax liabilities for companies whose investment to derive revenues from business activities decisions support those policy choices. We Total non-tax contributions 5 Governments use tax regimes including a wide range of licensing regimes, invested £8.9 billion in the networks and 2015-16 – % to incentivise investment revenue or production-sharing agreements services relied on by our customers in 2015-16; and, for communications companies, radio Companies are an important source of a substantial level of investment (not least spectrum fees and auction proceeds. These 3 5 investment and employment. Governments 19 when set against a total profit before tax of additional sources of government revenue seeking to stimulate or protect jobs and capital £1.8 billion), which was reflected in our tax are often substantial – sometimes exceeding investment often develop corporate taxation liabilities in each country of operation. We set the monies raised through taxation – and strategies that are designed to attract the out more detail on our views in multinationals, represent a critically important contribution shareholder funds necessary to deliver key 73 governments and tax overleaf. to public finances. It is therefore essential political objectives and achieve a wider national to take these government revenue-raising benefit. Those strategies include tax allowances mechanisms into account when assessing for capital expenditure, exemptions from £18 billion the extent to which a company is playing its Licence fees certain taxes and tax relief on the interest on Spectrum auctions invested in building digital infrastructure part in funding wider civil society. In 2015-16, Usage fees debt raised to fund investment. Many of those across Europe – including more than cash revenues from Vodafone to Other fees measures are debated in, and approved by, £4 billion in the UK – between 2011 and 2016 governments from non-taxation-based national parliaments as part of a government’s

Revenues and corporation tax: an illustrative example This is an illustrative example of a company with £1 million of revenue a year that has borrowed money to invest in new equipment or premises and that has relatively high operating costs, and demonstrates how a company’s corporation tax liability may only be a small proportion of its revenue. Total revenue £1,000,000 Operating costs (eg costs relating to providing services, maintaining equipment, plant and premises, and purchasing raw materials) (£650,000) Administration costs (eg staff, property costs) (£75,000) Annual deduction for capital expenditure (£150,000) Interest (ie relief on debt interest costs arising from borrowings to fund expansion) (£100,000) Profit before tax £25,000 Corporation tax at 20% of profits £5,000

7 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Multinationals, governments and tax

Many governments purposefully from a multinational company. It is important Determining the location for Transfer pricing shape their taxation policies in order to note that in international taxation disputes centralised operations Governments generally also require to compete with other countries of this kind, there is often not a ‘right’ answer; As an international business, Vodafone – in multinational companies to apply ‘transfer there are instead different perspectives on common with all multinational companies pricing’ rules to inter-company activities to attract international businesses the correct interpretation. Some disputes and capital to their country and – can choose from a range of locations to ensure that profits are allocated to the (and the associated litigation) can run for a when setting up certain centralised global countries where the relevant economic therefore stimulate job creation and number of years. operations, such as procurement or IT activity takes place. Vodafone has a number skills development. More generally, Governments have also established support. In determining the location for a of centralised global functions located governments also use tax rules to measures that restrict companies from business operation, we consider a wide within specific countries, all of which operate incentivise (or disincentivise) a wide entering into artificial arrangements range of factors beyond the local tax in accordance with OECD transfer pricing range of activities and behaviours that would enable them to move profits environment, including: rules. For example, the intellectual property across society as a whole. from one country to another lower-tax • the stability and predictability of the associated with the Vodafone brand is held in destination. We support those measures; political, regulatory and social environment, the UK, and the team of brand and marketing Double taxation without decisive intervention, aggressive and including respect for the rule of law and professionals responsible for the strategic Governments also enter into pan-regional artificial constructs of the type that concern compliance with international human international development and deployment and bilateral cooperation agreements governments (and the wider public) threaten rights conventions; of the Vodafone brand is based in London. to undermine the integrity of equitable and The transfer pricing arrangements in place that are intended to enable companies to • the availability of relevant skills within the sensible international taxation norms. ensure our operating companies around establish operations in different countries, local labour force together with labour the world pay an arm’s-length, externally and operate and trade across borders with as The majority of our businesses are licenced costs and the overall cost of operations; few impediments as possible. Multinational on a national basis and run by companies benchmarked and verified royalty fee to a • the effectiveness of transport links; companies such as Vodafone therefore operate incorporated and taxed in the same jurisdictions UK-based Vodafone Group company for use in an international taxation environment as our customers. Vodafone actively avoids • the quality and reliability of communication of the Vodafone brand. that is determined by governments working entering into such artificial arrangements; for networks; and We have established international IT and collectively (in some respects) as well as example, we will not seek artificially to divert • the range and cost of commercial back office support hubs in countries (much more often) individually. profits earned in one jurisdiction to another real estate. including Germany, Ireland, Hungary, These inter-governmental agreements lower-tax jurisdiction in order to minimise the Our focus is on selecting locations that are Romania, India and Egypt, and we provide aim to ensure multinational companies are total tax payments due. Our Tax Principles, most logical from an operational and strategic insurance services from our regulated not subject to ‘double taxation’, ie paying shown overleaf, mandate that Vodafone will perspective. While we do take the local tax businesses in Malta, all of which operate tax twice over in two different countries only adopt business structures that reflect environment into account, we do not choose under similar transfer pricing arrangements. in relation to the same economic activity. genuine and substantive commercial and locations on the basis of tax arrangements The same rules also apply to our global There is immense complexity within these operational activities. This means that our that would be essentially artificial in nature subsidiaries based in Luxembourg, as arrangements and governments sometimes corporate tax liabilities are paid in the country and that would lead to the location of explained in the Luxembourg section below. disagree with each other on matters of both in which the relevant economic activities activities in countries that may offer an policy and the practical implementation – take place; exactly the kind of outcome that attractive tax regime but would be impractical whenever one country’s laws have an effect governments are seeking to deliver through in other respects. on another country’s laws – of the taxes due their measures to address artificiality. 8 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Tax policy, conduct and Principles

Tax laws are often unclear and subject Key components of our Tax Principles to a broad range of interpretations. Vodafone’s Tax Principles The areas below form the foundation of our approach to tax and work alongside our Furthermore, the financial affairs of We employ professionals who are responsible tax risk management policy; large multinational corporations are for our tax affairs in every country in which we operate. Our tax teams must follow a clearly unavoidably complex: we typically defined set of Principles and behaviours (as To manage efficiently the tax cost to the Group of doing process and submit around 10,000 tax detailed in our tax policy) which are aligned Tax value business, including the Group’s cash taxes and effective tax returns to tax authorities around the with the Vodafone Group Code of Conduct. rate, within the ambit of all applicable laws world every year. We will: Risk and To control and manage tax risks and the Group’s The assessment and management of • comply fully with all relevant legal and reputation through appropriate policies, communication tax uncertainty is therefore a significant regulatory obligations in line with our reputation and robust defence challenge for any company of Vodafone’s broader social responsibilities and our size. The key issues are subject to review by stakeholders’ expectations; Business To be recognised as a vital business partner by our the Group Executive Committee (ExCo) and, stakeholders and to facilitate the growth and development • act with integrity in all tax matters, disclosing partnering separately, by the Vodafone Group Board all relevant facts to tax authorities in all of the Group’s business activities in a tax-efficient manner (through the Audit and Risk Committee) countries in which we operate under a policy twice a year. Our tax strategy is attached of full transparency based on open and honest To influence governments and tax authorities here, and our tax code of conduct and tax risk relationships with those authorities; and Influencing constructively and positively in the interests of all management policy can be found here and our stakeholders • pursue clarity and predictability on all tax are summarised in our Principles. matters, wherever feasible; and seek to protect In 2016, the UK Government introduced a shareholder value in line with our broader To develop and enhance our people professionally and requirement for large companies to publish fiduciary duties. People personally as part of a world-class international tax team their tax strategy for their 2017-18 year end. As part of our broader commitment to We will not: corporate transparency, we first published • seek to establish arrangements that are To ensure the integrity of all reported tax numbers our tax code of conduct in 2007 and our tax artificial in nature, are not linked to genuine Compliance and timely compliance with all relevant statutory risk management strategy in 2009 and have business requirements and would not stand tax obligations published updated versions ever since. Those up to scrutiny by the relevant tax authorities; disclosures – which more than meet the UK • artificially transfer profits from one jurisdiction Customer To act where possible in meeting the above objectives Government’s requirements – have also been to another to minimise tax payments; or experience in a way that will enhance our customers’ experience complemented, since 2012, by this Report. • pay more tax than is properly due under a reasonable interpretation of the law and upon receipt of a lawful demand.

9 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Vodafone, Luxembourg and ‘tax havens’

As we explain in Multinationals, A more nuanced definition of the term ‘tax customers to communicate when travelling market conditions or performance. The governments and tax, many haven’ focuses on national tax policies that across more than 190 countries, and provides, difference arising between the acquisition governments choose to develop have the effect of incentivising activities that on a commercial basis, specialist roaming cost and the newly reduced value of the are ring-fenced from the local economy, may management and procurement services to acquired business – and therefore the loss tax regimes that offer multinational be specific to individual companies rather third parties. experienced by shareholders – is treated as a companies some form of competitive than available to all market participants, In common with many other EU member loss for tax purposes and can be offset against advantage in order to attract inward and may be largely artificial in nature and states, Luxembourg’s tax legislation is profits. For example, if a company used investment. As a consequence, designed purely to minimise tax. As set out scrutinised and approved by the country’s €5 billion of its shareholders’ funds to acquire variations have emerged between in our Tax Principles above, it is our policy not parliament. The tax principles its laws are a business that is later valued at €3 billion, the tax regimes of different countries to enter into such artificial arrangements. based on are largely in line with those of many the effect from the shareholders’ perspective is €2 billion of value foregone. While it may over the years and some countries One country that has been the focus of other member states, including a standard be a ‘paper loss’ up until the point where the have found themselves dubbed as ‘tax public and political scrutiny in recent years corporation tax rate, which at 29.22% is higher is Luxembourg. This is a country in which than the corporate tax rate in a number of company seeks to realise the asset, for the havens’, particularly where specific Vodafone has a significant presence and other EU member states, including the UK. company’s shareholders it is unquestionably aspects of the national tax system offer a loss nevertheless. which plays a material role in any assessment Why locate these activities in significant advantages to businesses of our overall contribution to public finances. Similar rules were in place in Germany Luxembourg? who choose to locate there. Our subsidiaries in Luxembourg are not 15 years ago when Vodafone acquired the As is the case in many member states, There are a number of different definitions of ‘brass plate’ companies. They are substantive Mannesmann conglomerate in 2000. That Luxembourg tax law also includes features the term ‘tax haven’. At its simplest, the term entities that carry out extensive activities acquisition was followed by the dotcom crash, that are particular to that country and were is relative: if the tax regime in Country A has that are critical to our businesses worldwide. wiping tens of billions of euros off the value of designed to shape the local tax regime to a significantly lower headline or effective tax We employ more than 300 people in our the former Mannesmann business, resulting incentivise inward investment. One of those rate than Country B, then through the eyes of Luxembourg headquarters building. Our in significant losses for the Luxembourg features is particularly significant from the people of Country B, Country A could be colleagues there manage the financing subsidiary involved and ultimately for all of Vodafone’s perspective. considered to be a ‘tax haven’. of many of our international operating Vodafone’s shareholders. Under the standard Under long-established Luxembourg tax Luxembourg tax code, we are able to offset Most governments – including all European companies, providing loans on a commercial rules, a reduction in the book value of a those historical losses against profits realised Union (EU) Member States and international ‘arm’s-length’ basis which reflect the costs of company’s investments (an impairment or within our Luxembourg subsidiaries. It should organisations such as the OECD – respect a borrowing from an external bank, in line with writedown of goodwill) that has been verified be noted that Luxembourg introduced government’s sovereign right to determine international best practice. Our Luxembourg- by independent auditors and the local tax tax reforms that took effect on 1 January tax matters. They also recognise that there is based global purchasing organisation – the authorities is recognised as a tax loss that can 2017 that place a time limit on how long a clear distinction to be made between fair tax Vodafone Procurement Company (VPC) be offset against profits. This would occur, losses incurred after this date can be used. competition, focused on the rates and scope – oversees more than €18 billion of global for example, if a multinational group with a Additionally, under UK Controlled Foreign of taxation, as opposed to tax practices that purchasing contracts. Our international subsidiary in Luxembourg acquired another Company rules, a proportion of profits from discriminate in favour of specific companies roaming team is also based in Luxembourg, business but then saw the value of that our Luxembourg subsidiary’s global financing or that cause harm to the wider economy. where it manages more than 650 international roaming agreements that enable Vodafone acquisition reduce as a result of deteriorating activities are also now taxable in the UK.

10 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

European Commission illegal state aid investigations

In the last few years, there have been a simple advance tax agreements to the extent number of cases of alleged illegal state that the companies involved allegedly aid under which governments in a number gained an advantage over competitors. It is of jurisdictions – including Luxembourg important to note that both the companies and Ireland – have been accused of and countries involved in those cases entering into special agreements with continue to contest the outcome of the individual multinational companies. The Commission investigations. European Commission has alleged that Vodafone has not entered into any special the arrangements in place had the effect agreements with the Luxembourg tax of reducing those companies’ overall tax authorities and is therefore not the focus charges beyond the levels possible under the of any related European Commission standard tax regimes in those jurisdictions. investigation. We have received advance tax In 2014, the European Commission opened agreements from the authorities in order to formal investigations into whether or not the confirm that the standard provisions of the tax rulings received by certain companies Luxembourg tax regime apply to our facts in Luxembourg, the Netherlands, Belgium and circumstances. Agreements of this kind and Ireland potentially infringed state aid are standard practice in many countries rules through enabling profit shifting. Those whenever there are complex transactions and investigations were followed by a series unclear tax regulations or substantial values of findings, published in 2016, alleging involved. We are confident that the advance state aid infringements in a number of tax agreements in Luxembourg do not in instances, most prominently including any way amount to any form of bespoke Apple and Ireland. arrangement with, or preferential treatment Tax rulings are a standard part of most from, the Luxembourg tax authorities. countries’ administrative tax practices and There has also been considerable public, do not in themselves constitute state aid if political and media debate on a separate they merely give certainty to the company issue related to Luxembourg: the disclosure as to how the relevant laws are to be applied and subsequent publication, in 2014, in practice, whether in relation to complex by media outlets of so-called ‘LuxLeaks’ commercial transactions or to areas of confidential documents allegedly setting uncertainty in domestic or international out details of the tax affairs of thousands tax law. Such rulings – typically known as of individuals and companies. As explained ‘advance tax agreements’ – may be provided above, our tax arrangements in the country on an informal or formal basis. In the conform to the rules set out in the standard Commission’s view, the tax rulings provided tax code and therefore we have not been a in the cases under investigation went beyond focus of the LuxLeaks debate.

11 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Why do we pay little or no UK Corporation Tax?

As we explain in Corporate sourced through public borrowing. The UK thousands of people even as – at the headline As explained earlier in the Report, UK responsibilities and obligations, Government also provides tax relief to all level – they consciously drive down revenue Corporation Tax accounts for less than 20% of all governments seek constantly to businesses to reflect the interest costs on the from Corporation Tax; and may even lead to the total taxes paid by UK businesses. As we debt raised to fund investment. Debt interest the increased payment of employee national explain in the Our contribution, country by adjust their tax regimes to stimulate relief has the effect of stimulating investment insurance and other taxes. country section of the Report, in 2015-16 we investment and encourage job by business; it also supports growth and job As we explain in Corporate responsibilities paid the UK Government £257 million, in cash, creation. The UK is no different. creation within the UK banks and financial and obligations, Corporation Tax is charged on in direct taxes of all kinds – for example, we We make huge investments in the UK. We institutions that provide the funding. profits, not revenues. The UK continues to be are one of the biggest business rates taxpayers spent over £1.2 billion in 2015-16 building an expensive and highly competitive country in the UK. We also paid the UK Government and upgrading the networks and services in which to do business; it is also one of the £34 million in cash for non-tax items including relied upon by millions of our customers. In £7 billion least-profitable mobile markets anywhere in spectrum and collected £721 million in indirect taxes on the Government’s behalf. addition, since 2000 we have paid the UK paid to the UK Government for spectrum the world. Our UK profit is therefore a small Government more than £7 billion for our licences since 2000 fraction of our gross UK revenue, which 3G and 4G radio spectrum licences. We raised produced an operating loss of £69 million in the money for those licences from UK banks Capital allowances and debt interest relief 2015-16. This profit is significantly less than and capital markets and we are paying more have been a long-established cornerstone the interest costs on our UK debt (in excess than £370 million a year in interest costs on of UK corporate taxation policy, the impact of £370 million in 2015-16) and is less than our overall UK borrowings to UK banks and of which – for every company that chooses our annual UK capital investment programme financial institutions. to borrow and invest heavily in the UK – is (more than £1.2 billion in 2015-16). Capital to reduce very considerably their typical allowances and debt interest relief therefore UK Corporation Tax payments. In addition, more than subsume our UK profit (indeed, they £1.2 billion successive UK governments have set out do so many times over), leading to a very low invested in building and upgrading our to reduce the UK Corporation Tax rate over or zero Corporation Tax charge. It is also worth UK network and services time – from 20% in 2016, which is one of the noting that our overseas financing subsidiaries lowest rates in the EU – and by 2020 it will fall have no bearing on our UK Corporation Tax The UK Government allows companies to further, to 17%. position; as we state in our Tax Principles, we do not artificially transfer profits to minimise claim tax relief on capital investment in their UK governments have therefore taken a series tax payments to the UK Exchequer. UK operations. These capital allowances are of deliberate policy decisions over many years a standard feature of the tax regime in many which, in effect, prioritise investment and job countries; they provide an incentive for private creation above increased UK Corporation Tax capital to step in to fund the development receipts. These are political choices, intended of infrastructure that would otherwise to support business growth, encourage skills have to be built by the state with funding creation and provide work to hundreds of

12 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

The HMRC/Vodafone controlled foreign companies settlement

In 2010, Vodafone and Her Majesty’s dispute was not related in any way to the tax Revenue and Customs (HMRC) concluded liabilities arising from our UK operations. We a long-running legal dispute focused on therefore questioned the UK tax authorities’ a specific point of UK and European tax application of the rules on both factual and legislation with a full and final settlement legal grounds, in common with a number of of £1.25 billion. other companies who had also challenged The background to this settlement is highly the UK’s approach to CFC legislation. complex. It was focused on an area of law As explained in our Luxembourg section, whose application was unclear and which Vodafone’s subsidiary in that country is successive UK governments agreed needed the main financing company for our many to be rewritten. It involved nine years of operations around the world. The UK tax legal argument, three court cases and two authorities argued that, had those financing independent appeals, followed by a detailed activities been established and undertaken HMRC review and settlement in 2010. That in the UK, they would have attracted tax in settlement was then followed by a National the UK, and that therefore tax should be Audit Office (NAO) inquiry in 2012, assisted payable under UK CFC provisions. Vodafone by a former High Court judge, Sir Andrew argued that, as a matter of European Park. The NAO report concluded that the law, we were freely entitled to establish HMRC/Vodafone settlement was a good activities wherever we chose, and that as a outcome for the UK taxpayer and that if matter of fact, these were neither artificial Vodafone had chosen to continue litigation arrangements nor did they have any impact instead of settling with HMRC “there was on Vodafone’s UK tax liabilities. a substantial risk that the Department The underlying facts were scrutinised by (HMRC) would have received nothing”. the UK tax authorities and the points of The dispute focused on the UK tax law involved were examined in detail by authorities’ interpretation of Controlled the European Court of Justice, the UK Foreign Companies (CFC) legislation High Court and the UK Court of Appeal, and began when Vodafone bought the prior to the decision to reach a settlement. Mannesmann conglomerate in Germany Subsequently, the UK Government sought in 2000. The acquisition was largely for to address a number of inconsistencies shares and involved no borrowings or loans and flaws in UK CFC legislation, clarifying from Vodafone’s UK business. Importantly, the UK’s approach to this complex area of there was no reduction in Vodafone’s UK tax international taxation in new rules that took contributions as a consequence, and the effect in January 2013.

13 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Contributing to the development of tax policy

When governments seek to develop or We contribute to the tax committees of change tax policy, they invariably seek telecommunications industry organisations in input from a wide range of interested Germany, which work on legal developments in tax policy and on tax administration, stakeholders, including business including the interpretation and application advocacy groups and a large number of tax law. In the UK, we are a leading industry of individual companies. Vodafone representative in the Government’s Business regularly engages with governments – Forum on Tax and Competitiveness, which typically through public consultation aims to establish a more competitive UK tax processes or in our role as a member system. Vodafone is also a member of the Cellular Operators Association of India. of an industry group – to provide our perspective on how best to balance We are members of the South African Institute of Chartered Accountants (SAICA) tax the need for government revenues committee, which engages on a wide range of from taxation against the need to tax issues. We are active participants in various ensure sustainable investment. industry and economic forums in Tanzania We are active participants in the European and the Democratic Republic of Congo, with Round Table of Industrialists (ERT), the the support of the GSMA. We also frequently tax policy committee of the European participate in tax policy discussions at specific Telecommunications Network Operators’ tax conferences in Africa where both revenue Association (ETNO) and the Groupe Speciale authorities and corporates are represented. Mobile Association (GSMA), which represent the mobile industry when looking at emerging issues across the EU. We have shared our insights as a multinational operator with the European Commission’s Taxation and Customs Union Directorate- General (TAXUD). We are also one of the few companies in Italy to enter into the new cooperation compliance mechanism with the Italian Ministry of Economy and Finance and are active participants in the tax policy committees of Assotelecomunicazioni and the Confindustria Digitale in Italy.

14 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Vodafone and the OECD BEPS project

The Organisation for Economic Cooperation and Development’s • changes to refine the application of transfer pricing We continue to engage constructively with the OECD, the (OECD) work on ‘Base Erosion and Profit Shifting’ (BEPS)5 was guidelines on intercompany charges; and Commission and governments both directly and through our created in response to calls to ensure that multinationals are • changes to cap the tax deductions available for interest membership of bodies such as the Confederation of British taxed “where their economic activities take place and value is expenses in certain circumstances. Industry and the 100 Group, on these and other related issues. created”. It was also designed to address public concerns about The BEPS action plan is leading to some significant changes in Our focus is to continue to support the OECD, European the integrity of national and international taxation systems in national and international tax rules and a new set of standards Commission and governments in implementing these an ever-more complex global economy. for international cooperation and transparency. It is also likely, recommendations in a manner that supports international trade, ‘Base Erosion’ is the term used to describe the reduction in however, to result in an increased level of disputes on the incentivises greater investment in infrastructure and services, a country’s overall tax revenues as a consequence of the allocation of taxing rights between countries. fosters economic growth, employment and prosperity and movement of corporate activity and funds between different generates greater public trust in the international tax system. The European Commission has announced its intention to jurisdictions. ‘Profit Shifting’ is the term used to describe require member states to implement the OECD’s various We will monitor the application of the proposed changes in the artificial arrangements under which companies move recommendations where appropriate and has also developed national laws and, in particular, the proposed changes on profits from one jurisdiction to another jurisdiction in order other anti-tax avoidance initiatives of its own in certain areas. interest deductibility that may have the effect of limiting the to minimise tax payments – an activity not permitted under It has specifically done so through the ‘Anti-Tax Avoidance deductibility of interest on genuine third-party UK debt of the Vodafone’s own Tax Principles. Directive’ that was issued in January 2016 and which mandates kind we describe in the UK section of this Report. The resulting OECD BEPS action plan was endorsed by G20 several of the BEPS measures as well as other initiatives member states and a number of other developing countries (including charges for the relocation of assets between states). in November 2015. Following endorsement of the BEPS The Commission has also reissued proposals for a new Common measures, the focus has now shifted to designing and putting Consolidated Corporate Tax Base (CCCTB) for multinationals, in place an inclusive framework for monitoring BEPS and which it aims to introduce in stages from 2019 onwards – though supporting the implementation of the measures, with the this is still subject to approval by member states themselves and 57 jurisdictions now participating through their signatory therefore it is not yet certain that it will be introduced. of the Multilateral Competent Authority Agreements. The UK is among several governments – following further The BEPS 15 point action plan includes calls for: consultation with those impacted by the proposals – that has • companies to report their profits and taxes to tax authorities initiated a process to introduce the OECD’s recommendations on a country-by-country basis, which has now been into law. The requirement to report income, profit and taxes implemented in 38 countries; to tax authorities on a country-by-country basis from • member states to restrict harmful tax practices that unfairly 31 December 2017 complements our existing and ongoing and inappropriately offer certain tax incentives; commitment to tax transparency and country-level public disclosure, as exemplified by this Report. • restrictions on the ability of taxpayers to use tax treaties for abusive purposes; We welcome the BEPS initiative and support increased transparency in this critically important area of public policy, • a redefinition of when a taxable presence arises in a country as well as measures by the OECD and European Commission and hence triggers a need for a company to file a tax return to eliminate artificial profit shifting and unfair tax competition. and pay taxes in that country;

5 http://www.oecd.org/ctp/beps-explanatory-statement-2015.pdf 15 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Tax and emerging markets Africa £715 million £1.3 billion Vodafone is a significant contributor paid, in cash, in taxes and other fees to in total contributions paid, in cash, to the development of a number of governments in 14 countries in the region to governments in the region economies across Africa. As a major investor, taxpayer, employer and As well as running communications networks across Africa, in 2007, we created the M-Pesa Total contributions: African region purchaser of local goods and services, mobile money transfer service and launched – £m we make a major contribution to it with our Kenyan associate, Safaricom. The 23 910 the delivery of governments’ policy service is now available across ten countries 53 objectives across the continent. and is a well-established part of our business 105 Our sub-Saharan subsidiary, Vodacom, was with more than 25 million active users. 456 107 first awarded a licence in South Africa in 1994. M-Pesa enables people excluded from We have since expanded our presence across conventional banking to access a wide range 185 Africa through various acquisitions. We have of financial services – from basic purchases 352 been operating in Egypt since 1998 when to payroll and micro-finance loans and we were awarded a licence; we expanded savings – simply, safely and securely via their into Kenya (where we own 40% of Safaricom) mobile phone. M-Pesa has had a profoundly South Africa Ghana in 2000 and acquired the business that is transformative effect on lives and livelihoods, Egypt Mozambique Kenya Lesotho now Vodafone Ghana in 2008. We now have providing people in some of the world’s DR Congo Other operating businesses in eight countries and poorest communities with financial security Tanzania a presence in another six markets across the and the ability to start and grow a business. continent6, employ more than 18,000 people Further details of M-Pesa can be found here. (and provide indirect employment to many We take our responsibilities to contribute to more) and have invested a total of £5.3 billion emerging market economies seriously and over the last five years. our Principles, conduct and approach to tax In 2015-16, our African businesses paid is the same as in any other part of the world. £715 million to governments in taxes and Our commitment to transparency, openness other fees, accounting for 12% of the total and honesty forms a fundamental part of direct tax and non-tax contributions we made our Tax Principles globally and is particularly to governments around the world. Our total important in environments with a history contributions to governments across the of endemic corruption and where public continent in 2015-16 were over £1.3 billion institutions are less well developed than and exceeded £4.2 billion in total over the last their OECD counterparts. five years.

6 Angola, Cameroon, Democratic Republic of Congo, Egypt, Ghana, Ivory Coast, Kenya, Lesotho, Mozambique, Nigeria, Sierra Leone, South Africa, Tanzania, Zambia 16 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Those rules, which were back-dated to 1962, India were designed to require taxes to be paid Vodafone is the largest foreign direct retrospectively which, as the Supreme Court investor in India with more than had concluded, could not be levied against £13.1 billion invested since 2007. Vodafone under any reasonable interpretation of the evidence or the law. We are also one of the biggest taxpayers in We continue to maintain that no tax is India with more than £10 billion of tax and due on the 2007 acquisition and that any spectrum payments made to the Indian attempts to impose such a tax, under the Government since 2011-12. In 2015-16, our retrospective tax rules, would be in breach of direct and indirect contributions to Indian India’s obligations under international law. public finances exceeded £2.6 billion. We have had constructive discussions with the Indian Government since then, however, £10 billion India does not accept that its conduct is in breach of international law and we have been paid, in cash, to the Indian Government, unable to agree on a way forward without in taxes and licence fees since 2011-12 arbitration. On 17 April 2014, we filed our Dispute over 2007 acquisition notice of arbitration under the bilateral investment treaty between the Netherlands In 2007, Vodafone, through one of its and India (the Bilateral Investment Promotion Dutch companies, purchased an indirect and Protection Agreement) in an effort to stake in a company in India from Hutchison resolve the dispute. The Indian Government Telecommunications International Limited and Vodafone have since both appointed (HTIL). After the acquisition was completed, arbitrators and the President of the the Indian tax authorities sought to raise a tax International Court of Justice in the Hague demand against Vodafone, even though the has appointed Sir Franklin Berman QC as the transaction took place outside India between presiding arbitrator. two non-Indian entities and Vodafone was the In November 2016, the Indian tax authorities buyer, not the seller. commenced action against HTIL (part of The Indian tax authorities’ actions led to a the Hutchison Group) itself for the first time, protracted legal dispute, culminating in a issuing the company with a draft assessment hearing before the Indian Supreme Court, order under which the authorities are seeking which concluded unambiguously and capital gains tax allegedly due in India on unanimously, in January 2012, that no tax was the 2007 transaction. The Hutchison Group due. Although the country’s highest court disputes the validity of the assessment and had vindicated Vodafone’s position, the Indian any liability for taxes in India. Government subsequently changed the law to introduce retrospective taxation rules.

17 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Our contribution, country by country

Introduction 19 Africa, Middle-East Country-by-country and Asia-Pacific 33 narrative reporting 22 Enterprise sales and Our contribution, marketing locations 41 country by country Other non-operating assets 50 Europe 23 18 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Introduction

In this section of the Report, we provide For the first time, this year’s Report includes company’s tangible role in helping to fund an overview of our total contribution to £11.4 billion revenue and profit before tax on a country-by- public services. International accounting rules public finances on a country-by-country, country basis: our cumulative revenue in governing the reporting of a multinational paid, in cash, to the public finances 2015-16 was £41.0 billion and our total profit company’s profit and loss tax liabilities and of our countries of operation cash basis covering every jurisdiction before tax was £1.8 billion. As we explain earlier charges are complex and reflect a wide in which there is a registered Vodafone on page 5, we also collect large amounts of tax range of factors such as deferred taxation, Total economic contribution – £bn entity. In the 2015-16 financial year, on governments’ behalf; our 2015-16 indirect losses, group-level taxation and various our local operating companies, holding 15 14.8 tax contribution was £5.3 billion. Our total provisions related to uncertain tax positions. companies, subsidiaries and other 13.5 cumulative contribution to the public finances The cash payments or reliefs arising from legal entities around the world paid 12 11.2 11.4 of our countries of operation was therefore those factors may be several years in the more than £11.4 billion. We also invested more future. As a result, there can be a variance more than £2.2 billion in direct taxes 9.3 9 than £8.9 billion in the networks and services between a multinational company’s statutory to governments in our countries of now relied upon by our customers. reported numbers over a specific time period operation plus more than £3.9 billion 6 The contributions we make to governments – particularly in territories with holding in other non-taxation-based fees and are reported on an annual actual cash paid companies as well as a local operating levies. Our total direct cash contribution 3 basis for each country in which we have a company – and the actual cash paid numbers to public finances during the year was registered Vodafone entity as we believe set out below7. For more detailed information about our financial performance in 2015-16, therefore more than £6.1 billion. 2012 2013 2014 2015 2016 this is the most meaningful and transparent metric we can use when assessing a see our Annual Report.

Vodafone’s operating entities

7 For example, see http://www.cbi.org.uk/ insight-and-analysis/tax-and-british-business 19 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

For each country listed below, we provide • external, which the OECD defines as reported is not incremental; it is, in essence, Appendix 4. These individual taxes paid are a narrative summary of the activities “the sum of revenues … generated from the same money already accounted for in the not broken down into their component parts undertaken in that jurisdiction, together with transactions with independent parties”; and first country’s external revenue figure that is but reflect, cumulatively, the tax contributions a full list of all registered Vodafone entities • internal, defined as “the sum of all then reported for a second time as internal paid to governments by the relevant including legacy and dormant subsidiaries. revenues… generated from transactions revenue in the second country. Internal Vodafone entities in each country. This Report has been prepared using data with associated enterprises”. revenue would also include the movement of presented in the Vodafone Group Plc Annual money between subsidiaries within the same Direct government revenue External revenue includes what would Report 2016. The data in the Annual Report country. For this reason, we believe that the contribution: non-taxation typically be determined as turnover in that it for that year was presented in Pounds Sterling external revenue number is by far the most mechanisms represents money received by the company and this is therefore the currency used in meaningful in terms of providing greater from third parties, that is from individuals and This encompasses all other forms of this Report. Vodafone Group now reports its insight into the flow of money into a company business customers. But it also includes other government revenue raised in addition to a financial performance in Euros which will also – within the context of the total economic sources of income from third parties, such as country’s direct taxation regime, including be the currency in the next version of this contribution that a company makes in each interest income. telecoms licence fees, radio spectrum Report to be published during the 2017-18 country in which it operates – and hence is management fees, proceeds from revenue- Internal revenue includes intra-company financial year. why we have chosen to disclose this metric. sharing agreements, usage fees and proceeds money flows arising from transactions from radio spectrum auctions. Examples of between various subsidiaries, holding Profit before tax these payment types are listed in Appendix 4. companies and group entities that are This represents the total taxable revenue in £2.2 billion subject to transfer pricing rules, requiring each country minus allowable expenses. This paid in direct taxes, in cash, to governments the attribution of revenues and profits on an provides the starting point for the corporate in our countries of operation ‘arm’s length’ basis, based on independent £3.9 billion tax calculations in each country although comparable valuations. Examples of internal contributed in other non-taxation-based – for a wide range of reasons – it may not The table of financial data for each country revenues include royalties, brand and fees and levies, such as spectrum licences necessarily reflect the agreed or final figure in consists of the following columns. intellectual property licence fees and interest the relevant tax return. The number excludes payments (but exclude dividend receipts). Indirect government Revenue dividends as these relate to distributions of revenue contribution While the internal revenue metric provides a profits after tax between companies. It also The revenue figure that we disclose for each useful insight into the movement of money excludes certain accounting adjustments that This encompasses taxes collected country is equivalent to the amount that would between corporate entities into – and within have no effect on the local taxable profit of by companies on behalf of national be disclosed as ‘turnover’ in our Group accounts – a particular jurisdiction, it is impossible to the entities within each country. governments, including Pay As You Earn and is synonymous with ‘turnover’ or ‘sales’, as avoid some form of double-counting. Money (PAYE) income tax, employees’ National those terms are commonly understood. earned in one country from a third party (and Direct government revenue Insurance contributions, withholding taxes, From December 2017, under new OECD rules, reported in that country as external revenue) contribution: taxation sales and consumption taxes, and VAT. These all large multinational companies will be is then used to fund licence fees, royalties, This encompasses Vodafone’s total direct indirect contributions to government revenue required to file a country-by-country report procurement and other intra-company costs tax contribution in each country, including would not be collected (or generated to the with local tax authorities. Those reports – that are subject to transfer pricing or similar corporation tax, business rates or the same extent) if the company did not employ which are confidential and provided to tax arrangements with a corporate entity in equivalent, employers’ national insurance people and offer services or products to the authorities only – must include details of another country. That money will also then be contributions or equivalent, sector-specific customers responsible for paying the tax in revenues8 that the OECD breaks down under reported as internal revenue in the recipient taxes (such as ‘special’ taxes or ‘telecoms’ question, or procure goods and services from two overlapping categories: country. However, the internal revenue taxes), and other taxes, as illustrated in its suppliers on which such taxes are due.

8 Page 35 of the OECD guidance on country by country reporting 20 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Capital investment The forthcoming country-by-country reporting requirements set out by the OECD Our significant investments in building and will require the disclosure of this kind of data maintaining the networks and services – to national tax authorities on a confidential relied upon by more than 462 million mobile basis. We explain our support for that and 13.4 million broadband customers approach earlier in this Report and believe around the world – are often taken into that this disclosure – made on a voluntary account by local tax authorities when basis – of the information set out below, will determining corporate tax liabilities. help to provide greater public insight into Direct employment Vodafone’s significant economic contribution to the societies in which we operate. Vodafone is an important source of We have no view on the merits of direct versus employment and skills transfer worldwide. We indirect taxation nor on the distinction between provided incomes, benefits and the potential the revenues that flow to governments from for a technology sector career path, as well taxation versus those obtained through other as skills development for 107,667 people means such as spectrum fees. Governments – in more than 26 countries as of the end of not companies – determine the rules. March 2016. In addition, we have contractual relationships with many thousands of It is worth noting that the figures will also suppliers and partner companies around vary widely from country to country and from the world, each of which relies to a greater year to year as a result of local differences or lesser extent on revenues from Vodafone between, and annual movements in, factors to pay their employees’ wages. This year, such as levels of profit and capital investment. we have been able to allocate all of the There are also wide variations in local taxation employees in our central Group functions to regimes and other government revenue- the relevant territory, which has resulted in a raising mechanisms, many of which change number of year on year variances as detailed from year to year. For example, non-taxation- in the tables below. based revenues will typically be very high in a year in which a government benefits from the proceeds of a spectrum auction (as happened 107,667 in India in 2015-16), but much lower in a year where no such auction takes place. It is people employed in more than therefore not possible to draw any meaningful 26 countries around the world conclusions when seeking to compare the financial data for one country with that of another.

21 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Country-by-country narrative reporting

In this year’s Report, as previously, • countries in which we have legacy legal Those Principles apply to all of our legal local telecommunications operators where we aim to provide an informative entities that were inherited as part of an entities in all countries, including dormant we have no operational control over, or overview of our activities in each of acquisition in the past and which do not entities in so-called ‘tax haven’ locations shareholding in, those third parties. Under play an active role in the Group’s overall which were established in the past by some of those agreements, the local operator the countries listed below. We include structure or are otherwise dormant. companies subsequently acquired by is permitted to use the Vodafone brand. a summary setting out the context In a number of countries we have holding Vodafone. It takes time and money to This Report does not include jurisdictions of our activities in each location companies which manage our subsidiary liquidate those dormant entities so it is often where this is the case as we do not have a together with the relevant financial investments and joint ventures, whose main simpler to retain them as inactive legacy shareholding in, or control over, those third data in order to offer an insight into source of income is dividends from their entities with continued full disclosure to the parties and they are not included within our the factors that determine Vodafone’s respective subsidiaries and joint ventures. relevant tax authorities. We also enter into consolidated Group accounts. Partner Market agreements with third-party overall tax and economic contribution Those dividends are paid from the profits in a local market. That summary remaining after we’ve paid tax to the government of the country in which the includes a list of Vodafone’s legal subsidiary company is located. Our total contribution by country – % entities present in the country plus Our holding companies are based in a brief description of the purpose of countries which provide a stable foundation those entities. for numerous multinational organisations The countries included here extend beyond to enable the efficient flow of funding 18 those in which we have an operating licence between our individual country businesses, 23 in a manner which is also transparent. As we 4 as a mobile and/or fixed-line telecoms India Italy provider and include three further categories: explain in our Tax Principles, we do not enter 4 Germany South Africa into artificial arrangements (by which we Turkey Spain • countries in which we maintain an active 7 UK Other corporate function servicing the Group as mean arrangements that are not linked to 21 a whole but where we do not operate as a genuine business requirements) that would 9 14 communications provider; not stand up to scrutiny by the relevant tax authorities, nor do we artificially transfer • countries in which we have a legal profits from one jurisdiction to another to entity focused on marketing, sales and minimise tax payments. client support for large corporate and multinational customers but do not operate as a communications provider; and

22 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Our contribution, country by country

Europe Albania Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 84 5 4 6 5 18 425 2014-15 n/a n/a 8 8 8 23 411 We are a significant international investor in Albania where we operate mobile services with 1.8 million customers as of 31 March 2016. We also provide communications services to Albanian businesses. We entered the market in 2001 through the award of a mobile licence. In 2015, we established a financial services business to bring the M-Pesa mobile money service to Albanian society. Number of legal entities 2 Legal entities • Vodafone Albania M-Pesa SHPK • Vodafone Albania SHA

Czech Republic Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 366 19 12 17 47 74 1,735 2014-15 n/a n/a 10 8 44 83 1,823 We have one of the largest and most modern 4G network in the Czech Republic where we operate mobile and fixed-line services with 3.4 million customers as of 31 March 2016. We offer 3G and 4G coverage to 99% of the Czech population and also provide communications services to Czech businesses. We entered the market in 2005 through the acquisition of Oskar Mobil. Our 2015-16 non-tax contribution was higher than in the prior year primarily as a consequence of an initial payment for a spectrum licence following an auction which increased government receipts in that year. Number of legal entities 3 Legal entities • Vodafone Czech Republic A.S. • COOP Mobil S.R.O. • Oskar Mobil S.R.O.

23 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Germany Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 7,863 (347) 189 1,371 854 1,907 16,034 2014-15 n/a n/a 206 <1 1,026 2,203 15,568 Vodafone Germany is one of the leading integrated communications companies in Germany with 43.7 million SIM cards and 6.1 million fixed broadband customers. It offers mobile, fixed-line and TV services as well as a comprehensive ICT portfolio for enterprise customers, including world-class secure cloud computing services hosted and operated within Germany. The largest data centre in Vodafone is located in Germany and provides a range of IT services across the Group as a whole. Vodafone entered the market in 1993 when it acquired a 17% equity interest in E-Plus. In 1999, we acquired a 35% stake in Mannesmann Mobilfunk as a result of our merger with AirTouch which also resulted in the disposal of our interest in E-Plus. In 2000, Vodafone completed its takeover of Mannesmann AG and took full control of what is now Vodafone Germany. We have a number of holding companies in the country. These companies only own assets in Germany and do not affect our overall local tax position. We incurred a loss in Germany during 2015-16 for many of the reasons discussed earlier in the Report, where, previously, declining revenues have meant the profits we earned were not sufficient to cover the interest costs on Germany’s historic debt financing, including the debt which financed the purchase of spectrum licences and the acquisition of Kabel Deutschland. Our 2015-16 indirect tax contributions were higher in the prior year principally due to higher wage tax payments relating to Kabel Deutschland and a restructuring programme which was undertaken in that year. Our non-tax contributions in 2015-2016 include the payments made to acquire spectrum licences in an auction held during the year. Number of legal entities 26 Legal entities • Bluefish Communications GmbH • Verwaltung Urbana Teleunion Rostock GmbH • Kabel Deutschland Holding AG • Vodafone 1 Beteiligungs GmbH • Kabel Deutschland Holding Erste Beteiligungs GmbH • Vodafone Automotive Deutschland GmbH • Kabel Deutschland Holding Zweite Beteiligungs GmbH • Vodafone Enterprise Germany GmbH • Kabel Deutschland Siebte Beteiligungs GmbH • Vodafone GmbH • Kabelcom Braunschweig Gesellschaft für Breitbandkabel-Kommunikation mit • Vodafone Group Services GmbH beschränkter Haftung • Vodafone Institut für Gesellschaft und Kommunikation GmbH • Kabelcom Wolfsburg Gesellschaft für Breitbandkabel-Kommunikation mit • Vodafone Kabel Deutschland Field Services GmbH beschränkter Haftung • Vodafone Kabel Deutschland GmbH • Kabelfernsehen München Servicenter Gesellschaft mit beschränkter Haftung • Vodafone Kabel Deutschland Kundenbetreuung GmbH Beteiligungsgesellschaft • Vodafone Stiftung Deutschland gemeinnützige GmbH • Kabelfernsehen München Servicenter GmbH & Co. KG • Vouchercloud GmbH • TKS Telepost Kabel-Service Kaiserslautern Beteiligungs GmbH • Kabel Deutschland Neunte Beteiligungs GmbH • TKS Telepost Kabel-Service Kaiserslautern GmbH & Co. KG • Vodafone Vierte Verwaltungsgesellschaft GmbH • Urbana Teleunion Rostock GmbH & Co. KG

24 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Greece Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 621 17 16 6 145 93 2,118 2014-15 n/a n/a 26 104 154 75 2,228 We are a significant international investor in Greece where we operate mobile, fixed-line and TV services with 6.3 million customers as of 31 March 2016. We also provide communications services to Greek businesses. We entered the market in 1992 when Panafon S.A. was awarded a mobile licence. In 2014, we acquired the Hellas Online fixed-line and TV business. Our 2015-16 tax contributions are lower than the prior year due to a decrease in profitability and the impact of the resolution of a tax case, while our non-tax contribution was lower year on year as 2014-15 included a spectrum auction. Number of legal entities 6 Legal entities • 360 Connect S.A. • Victus Networks S.A. • Vodafone Global Enterprise Telecommunications (Hellas) A.E. • Vodafone Panafon Hellenic Telecommunications Company S.A. • Hellas Online S.A. • Zelitron S.A.

Hungary Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 312 8 20 16 86 66 3,366 2014-15 n/a n/a 19 <1 88 61 2,949 We are a significant international investor in Hungary where we operate mobile services with 2.8 million customers as of 31 March 2016. We also provide communications services to Hungarian businesses. We entered the market in 1999 through the award of a mobile licence to Vodafone Hungary. We also operate a large shared services centre in Hungary which provides specialist finance, supply chain, HR and enterprise support to companies across the Group as a whole. Non-tax contributions have increased in 2015-16 due to increased spectrum and related taxes. Number of legal entities 3 Legal entities • Tesco MBL Telecommunications Company Limited • Vodafone Magyarorszag Mobile Tavkozlesi Zartkoruen Mukodo Reszvenytarsasag • Vodafone Shared Services Budapest Private Limited Company

25 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Ireland Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 747 (13) 19 15 82 168 1,272 2014-15 n/a n/a 25 9 69 166 1,155 We are one of the largest international investors in Ireland where we operate mobile and fixed-line services with 2.2 million customers as of 31 March 2016. We are also a significant provider of communications services to Irish corporate and public sector customers. We entered the market in 2001 through the acquisition of Eircell. We operate a data centre in Ireland which provides IT services to companies across the Group as a whole. In 2015, we established a joint venture, Siro Limited, with the local electricity company ESB to bring ultrafast fibre-optic broadband services directly to the premises in more than 50 towns across Ireland. Many of the legal entities in Ireland were inherited as a result of small local acquisitions to expand our Irish operations and most of these are now dormant. Direct tax contributions have decreased year on year due to a decline in profits, while non-tax contributions have increased as a result of the delayed implementation of spectrum acquired in 2012. Indirect contributions increased largely due to the impact of the acquisition of the remaining 50% of Eudokia Limited, a network infrastructure company. Number of legal entities 22 Legal entities • SIRO Limited • Eudokia Limited • Talk To Me Limited • Vodafone Ireland Marketing Limited • Cable & Wireless GN Limited • Fonua Limited • Vodafone Global Network Limited • Vodafone Ireland Property Holdings • Cable & Wireless (Ireland) Limited • Interfusion Networks Limited • Vodafone Group Services (Ireland) Limited • Cable & Wireless Services (Ireland) Limited • MediaOne Limited Limited • Vodafone Ireland Retail Limited • Complete Network Technology Limited • Person to Person Limited • Vodafone Ireland Distribution Limited • Vodafone Ireland Sales Limited • Energis Communications (Ireland) Limited • Stentor Limited • Vodafone Ireland Limited • Western Cellular Limited

26 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Italy Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 4,542 464 123 203 517 1,190 7,384 2014-15 n/a n/a 96 23 734 1,154 6,864 We are one of the largest international investors in Italy where we operate mobile and fixed-line services with 26.1 million customers as of 31 March 2016. We are also a significant provider of communications services to Italian corporate and public sector customers, from small and medium-sized enterprises and municipalities to national agencies, central government and multinational companies. We entered the market in 1999 through the acquisition of our original stake in Omnitel as part of the merger with AirTouch. In 2014, we acquired one of the world’s leading automotive Machine-to-Machine (M2M) companies, Cobra Group, now Vodafone Automotive, and have located the headquarters of our global automotive Internet of Things (IoT) practice in the country. We also operate a data centre in Italy which provides a range of IT services to companies across the Group as a whole. Our 2015-16 direct tax contribution was higher than the prior year as a result of the absence of repayments in respect of overpaid taxes, while indirect contributions decreased primarily on account of an increase in customers taking out pre-paid mobile services and a corresponding decrease in post-paid contracts. Non-tax contributions increased as a result of the acquisition of additional spectrum in the year. Number of legal entities 8 Legal entities • Vodafone Automotive Electronic Systems S.r.L • Vodafone Gestioni S.p.A. • Vodafone Automotive Italia S.p.A. • Vodafone Global Enterprise (Italy) S.r.L. • Vodafone Automotive S.p.A. • Vodafone Italia S.p.A. • Vodafone Enterprise Italy S.r.L • Vodafone Servizi E Tecnologie S.r.L.

Malta Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 68 115 4 2 9 12 343 2014-15 n/a n/a 6 2 8 12 321 We are a significant international investor in Malta where we operate mobile and fixed-line services with around 310,000 customers as of 31 March 2016. We also provide communications services to Maltese businesses. We entered the market in 1990 through the award of a mobile licence. We base our global insurance operation in Malta where we provide services such as individual customer warranties for companies across the Group as a whole. Number of legal entities 4 Legal entities • Multi Risk Benefits Limited • Multi Risk Indemnity Company Limited • Multi Risk Limited • Vodafone Malta Limited

27 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Netherlands Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 1,384 (64) 48 - 177 250 3,598 2014-15 n/a n/a 20 - 196 295 3,480 We are a large international investor in the Netherlands where we operate mobile and fixed-line services with 5.1 million customers as of 31 March 2016. We are also a significant provider of communications services to Dutch corporate and public sector customers, from small and medium-sized enterprises and municipalities to national agencies, central government and multinational companies. We entered the market in 1995 through the award of a mobile licence. The Netherlands is Vodafone’s main holding company location as the country offers: • a stable economic and political environment; • an extensive network of international bilateral treaties designed to protect companies investing overseas; • a commitment to providing certainty in advance on tax matters; and • a long-established principle of capital import neutrality under which the Netherlands authorities do not levy additional taxes on investments overseas by companies based in the Netherlands when specific conditions are met. Our holding companies in the Netherlands own the majority of the Group’s international assets which makes it more straightforward for us to invest in expanding our businesses worldwide. This is particularly important for our emerging markets companies whose access to capital would be severely constrained if limited to local sources of financing only. We incurred a loss in the Netherlands in 2015-16 as a tough trading environment over a number of years has meant the profits from our operating business are lower than the interest costs our holding companies incur on debt used to acquire new investments. Our 2015-16 direct tax contributions are higher than the previous year as 2014-15 included a repayment of tax which was overpaid in an earlier period. In December 2016, we completed the merger of our Dutch operating company with Ziggo – the local subsidiary of Liberty Global – to create a 50:50 joint venture national unified communications provider in the Netherlands. Number of legal entities 10 Legal entities • Cable & Wireless Aspac BV • Vodafone Europe BV • Cable & Wireless Internet Service Provider BV • Vodafone International Holdings BV • European Networks BV • Vodafone Libertel BV • mITE • Vodafone Panafon International Holdings BV • Vodafone Enterprise Netherlands BV • XM Mobile BV

28 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Portugal Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 716 23 26 23 78 257 1,483 2014-15 n/a n/a 37 23 92 268 1,433 We are one of the largest international investors in Portugal where we operate mobile, fixed-line and TV services with 5.3 million customers as of 31 March 2016; we also reach 1.6 million homes with our ultra-fast fibre-optic network and provide communications services to Portuguese businesses. We entered the market in 1999 following the merger with the AirTouch group under which we acquired Telecel. Tax contributions have decreased year on year as a result of a reduction in profits. Number of legal entities 3 Legal entities • Celfocus – Soluções Informaticas Para Telecomunicações SA • Oni Way – Infocomunicações SA • Vodafone Portugal Comunicações Pessoais SA

Romania Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 558 39 24 17 71 97 3,993 2014-15 n/a n/a 26 13 72 103 3,705 We are a significant international investor in Romania where we operate mobile services with 8.5 million customers as of 31 March 2016. We also provide communications services to Romanian businesses. We entered the market in 2005 through the acquisition of Mobifon. In 2015, we established a financial services business to bring the M-Pesa mobile money service to Romanian society. We also operate a large technology shared services centre in Romania which provides specialist back-office and technology support to companies across the Group as a whole. Number of legal entities 4 Legal entities • Vodafone Romania M – Payments SRL • Vodafone Romania SA • Vodafone Romania Technologies SRL • Vodafone Shared Services Romania SRL

29 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Spain Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 3,679 (268) 139 60 245 862 6,006 2014-15 n/a n/a 199 100 279 850 6,050 We are one of the largest international investors in Spain where we operate mobile, fixed-line and TV services with 17.3 million customers as of 31 March 2016. We are also a significant provider of communications services to Spanish corporate and public sector customers, from small and medium-sized enterprises and municipalities to national agencies, central government and multinational companies. We entered the market in 2000 when Vodafone Group acquired a stake in Airtel Movil, which was awarded its first mobile licence in 1995. In 2014, we acquired the ONO Group, which offers cable TV and fixed-line services. We incurred a loss in Spain during 2015-16 for many of the reasons discussed earlier in the Report. Previously, declining revenues have meant the profits we earned have not been sufficient to cover the interest costs on Spain’s historic debt financing, including debt which financed spectrum licences and the acquisition of the Ono Group. Our economic contributions have decreased in 2015-16 largely due to the impact of synergies achieved between the fixed and mobile companies and the timing of payments in respect of spectrum licence fees. Number of legal entities 8 Legal entities • Grupo Corporativo ONO S.A.U. • Vodafone Enterprise Spain S.L.U. • Tenaria S.A.U. • Vodafone España S.A.U. • Vodafone Automotive España S.L. • Vodafone Holdings Europe S.L.U. • Vodafone Enabler España S.L. • Vodafone ONO S.A.U.

30 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

United Kingdom Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 6,719 (486) 257 34 721 1,237 17,965 2014-15 n/a n/a 320 28 726 1,309 16,681 Vodafone was founded in the UK more than 30 years ago. The country remains the domicile of the Group; however, as Vodafone has expanded internationally, the UK now accounts for less than 1% of the Group’s total adjusted operating profit as of 31 March 2016. More than 95% of our customers and around 84% of our employees are outside the UK and less than a quarter of our top 230 global senior leaders are nationals from our country of domicile. We are one of the largest private infrastructure investors in the UK where we operate mobile and fixed-line services with 18.3 million customers as of 31 March 2016. We are also a significant provider of communications services to UK corporate and public sector customers, from small and medium-sized enterprises and local government departments to central government and some of the world’s largest multinational companies. In addition to the Vodafone UK local operating business, the Group’s core global functions are located in the UK. These include the corporate headquarters which provides professional support services to companies across the Group as a whole. For example, the Vodafone brand (and associated intellectual property assets) and global brand management team are located in the UK. This means that under transfer pricing arrangements (explained earlier in this Report) which have been agreed with tax authorities around the world, all of the Group’s operating businesses pay royalty fees into the UK for the use of the Vodafone brand and to fund the activities of the team which oversees it. Similarly, the global function which supports the Group’s affiliate Partner Market network is also based in the UK. We also have a number of UK holding companies (which ultimately own the entire Group) as well as companies that manage the external treasury activities of the Group as a whole. Direct tax contributions were lower given the conclusion in 2015-16 of payments scheduled under the Controlled Foreign Companies settlement with HMRC in 2010 resulting in a full and final settlement of £1.25 billion, as explained earlier in the Report. All of these activities create revenue that is subject to tax in the UK after the costs incurred. Our overall UK profit and tax liabilities are also determined by the factors explained earlier in the Report including: • substantial levels of capital investment (more than £1.2 billion in 2015-16); • significant debts associated with UK spectrum costs and to fund the expansion of the Group; and • low profitability of the UK mobile market compared with other countries. All these factors combined have the effect of suppressing the total profit before tax in the UK, which fell to a loss of £486 million in 2015-16. This figure also reflects the impact of lower service revenue amid ongoing customer service challenges arising from a billing IT system migration. Our long history in the UK means that we have a significant number of legal entities linked to past mergers and acquisitions or discontinued lines of business which play no active role in the Group today. Almost 70% of all Vodafone legal entities in the UK are dormant but remain registered for the reasons we explained earlier in the Report. Number of legal entities 201 Legal entities • AAA (Euro) Limited • Business Serve Limited • Cable & Wireless Communications Data • Cable & Wireless Global Holding Limited • AAA (MCR) Limited • C.S.P. Solutions Limited Network Services Limited • Cable & Wireless Global • AAA (UK) Limited • Cable and Wireless (India) Limited • Cable & Wireless Communications Telecommunication Services Limited • Acorn Communications Limited • Cable & Wireless Access Limited Starclass Limited • Cable & Wireless Holdco Limited • Apollo Submarine Cable System Limited • Cable & Wireless A-Services Limited • Cable & Wireless Europe Holdings • Cable and Wireless Nominee Limited • Aspective Limited • Cable & Wireless Aspac Holdings Limited Limited • Cable & Wireless Trade Mark • Astec Communications Limited • Cable & Wireless Capital Limited • Cable & Wireless Global Business Management Limited Services Limited • Bluefish Communications Limited • Cable & Wireless CIS Services Limited • Cable & Wireless U.K.

31 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

United Kingdom (continued) Legal entities • Cable & Wireless UK Holdings Limited • How2 Telecom Limited • The Eastern Leasing Company Limited • Vodafone Distribution Holdings Limited (continued) • Cable & Wireless UK Services Limited • Intercell Communications Limited • The Old Telecom Sales Co. Limited • Vodafone Enterprise Europe (UK) Limited • Cable & Wireless Waterside Holdings • Intercell Limited • Thus Group Holdings Limited • Vodafone Enterprise Global Limited Limited • Internet Network Services Limited • Thus Group Limited • Vodafone Euro Hedging Two • Cable & Wireless Worldwide Pension • Invitation Digital Limited • Thus Group plc • Vodafone Euro Hedging Limited Trustee Limited • Isis Telecommunications Management • Thus Limited • Vodafone Europe UK • Cable & Wireless Worldwide plc Limited • Thus Profit Sharing Trustees Limited • Vodafone European Investments • Cable & Wireless Worldwide Services • Jaguar Communications Limited • Townley Communications Limited • Vodafone European Portal Limited Limited • Legend Communications plc • Uniqueair Limited • Vodafone Finance Limited • Cable & Wireless Worldwide Voice • London Hydraulic Power Company • Vizzavi Limited • Vodafone Finance Luxembourg Limited Messaging Limited • Metroholdings Limited • Voda Limited • Vodafone Finance Sweden • Cellops Limited • ML Integration Group Limited • Vodacall Limited • Vodafone Finance UK Limited • Cellular Operations Limited • ML Integration Limited • Vodacom Business Africa Group Services • Vodafone Financial Operations • Central Communications Group Limited • ML Integration Services Limited Limited • Vodafone Global Content Services • Central Telecom (Northern) Limited • Mobile Phone Centre Limited • Vodacom UK Limited Limited • Chelys Limited • Mobiles 4 Business.com Limited • Vodafone (New Zealand) Hedging • Vodafone Global Enterprise Limited • City Cable (Holdings) Limited • Nat Comm Air Limited Limited • Vodafone Group (Directors) Trustee • Cornerstone Telecommunications • Netforce Group Public Limited Company • Vodafone (NI) Limited Limited Infrastructure Limited • Oxygen Solutions Limited • Vodafone (Scotland) Limited • Vodafone Group Pension Trustee Limited • CT Networks Limited • P.C.P. (North West) Limited • Vodafone 2 • Vodafone Group Plc • CWW Operations Limited • Peoples Phone Limited • Vodafone 4 UK • Vodafone Group Services Limited • Dataroam Limited • Pinnacle Cellular Group Limited • Vodafone 5 Limited • Vodafone Group Services No.2 Limited • Digital Island (UK) Limited • Pinnacle Cellular Limited • Vodafone 5 UK • Vodafone Group Share Trustee Limited • Digital Mobile Spectrum Limited • Project Telecom Holdings Limited • Vodafone 6 UK • Vodafone Hire Limited • Emtel Europe Limited • PT Network Services Limited • Vodafone Americas 4 Limited • Vodafone Holdings Luxembourg Limited • Energis (Ireland) Limited • PTI Telecom Limited • Vodafone Automotive UK Limited • Vodafone Intermediate Enterprises • Energis Communications Limited • Quickcomm UK Limited • Vodafone Benelux Limited Limited • Energis Holdings Limited • Rian Mobile Limited • Vodafone Business Services Limited • Vodafone International Holdings Limited • Energis Local Access Limited • Singlepoint (4U) Limited • Vodafone Business Solutions Limited • Vodafone International Operations • Energis Management Limited • Singlepoint Payment Services Limited • Vodafone Cellular Limited Limited • Energis Squared Limited • Stentor Communications Limited • Vodafone Central Limited • Vodafone Investment UK • Erudite Systems Limited • T.W. Telecom Limited • Vodafone Central Services Limited • Vodafone Investments Australia Limited • Eurocall Holdings Limited • T3 Telecommunications Limited • Vodafone Connect 2 Limited • Vodafone Investments Limited • Flexphone Limited • Talkland Airtime Services Limited • Vodafone Connect Limited • Vodafone IP Licensing Limited • FM Associates (UK) Limited • Talkland Communications Limited • Vodafone Consolidated Holdings • Vodafone Leasing Limited • Gateway Communications Africa (UK) • Talkland International Limited Limited • Vodafone Limited Limited • Talkland Midlands Limited • Vodafone Corporate Limited • Vodafone M.C. Mobile Services Limited • General Mobile Corporation Limited • Talkmobile Limited • Vodafone Corporate Secretaries Limited • Vodafone Marketing UK • Generation Telecom Limited • Telecommunications Europe Limited • Vodafone DC Pension Trustee Company • Vodafone Mobile Commerce Limited • Global Cellular Rental Limited • Ternhill Communications Limited Limited

32 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

United Kingdom (continued) Legal entities • Vodafone Mobile Communications • Vodafone Overseas Finance Limited • Vodafone Specialist Communications • Vodata Limited (continued) Limited • Vodafone Overseas Holdings Limited Limited • Woodend Cellular Limited • Vodafone Mobile Enterprises Limited • Vodafone Panafon UK • Vodafone UK Content Services Limited • Woodend Communications Limited • Vodafone Mobile Network Limited • Vodafone Partner Services Limited • Vodafone UK Investments Limited • Woodend Group Limited • Vodafone Multimedia Limited • Vodafone Property Investments Limited • Vodafone UK Limited • Woodend Holdings Limited • Vodafone Nominees Limited • Vodafone Retail (Holdings) Limited • Vodafone Ventures Limited • Your Communications Group Limited • Vodafone Oceania Limited • Vodafone Retail Limited • Vodafone Worldwide Holdings Limited • Vodafone Enterprise Equipment Limited • Vodafone Old Show Ground Site • Vodafone Sales & Services Limited • Vodafone Yen Finance Limited Management Limited • Vodafone Satellite Services Limited • Vodaphone Limited

Africa, Middle East and Asia-Pacific Australia Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 867 (108) 13 16 38 118 1,593 2014-15 n/a n/a 13 31 28 209 1,695 We operate telecommunication services in Australia under a 50:50 joint venture with Hutchison Telecommunications (Australia) Limited with 5.2 million customers as of 31 March 2016. We also support a number of enterprise customers in Australia. We first entered the market in 1992 through the award of a mobile licence to Vodafone Pty Limited and established the joint venture with Hutchison in 2009. Our joint venture incurred a loss in 2015-16 as the business continues to recover following the difficulties it faced in previous years. Our 2015-16 non-tax contribution was lower than in the prior year as a consequence of the spectrum auction in 2013-14. We have included the individual entities owned by Vodafone Hutchison Australia Group for the first time this year. Number of legal entities 15 Legal entities • Bluefish Australia Pty Limited • VAPL No. 2 Pty Limited • H3GA Properties (No 3) Pty Limited • Vodafone Enterprise Australia Pty Limited • Mobileworld Communications Pty Limited • Vodafone Hutchison Australia Pty Limited • Mobileworld Operating Pty Limited • Vodafone Hutchison Finance Pty Limited • PPL Pty Limited • Vodafone Hutchison Receivables Pty Limited • Quickcomm (Pty) Limited • Vodafone Network Pty Limited • Vodafone Australia Pty Limited • Vodafone Pty Limited • Talkland Australia Pty Limited

33 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Democratic Republic of Congo Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 285 (8) 35 38 35 63 634 2014-15 n/a n/a 30 20 34 78 691 Vodacom is the second largest mobile operator in the Democratic Republic of the Congo (DRC). Over the last three years, we have invested more than £75 million in developing the networks and services relied on by our 8.5 million customers (as of 31 March 2016); this in turn has contributed positively towards economic development and job creation. Vodacom Congo (RDC) s.p.r.l. is a subsidiary of the South Africa-based Vodacom Group Limited, which owns 51% of the company. Congo Wireless Network owns the remaining interest. Vodacom entered the DRC in 2002 through the award of a mobile licence. Vodacom also operates mobile financial services through Vodacash s.p.r.l. (also known as M-Pesa in other markets), providing mobile money transfer, savings and credit services to people unable to access traditional banking systems. Non-tax contributions increased in the year due to the renewal of our 2G licence in December 2015. Number of legal entities 2 Legal entities • Vodacom Congo (RDC) SA • Vodacash s.p.r.l.

Egypt Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 1,202 293 120 67 166 299 8,373 2014-15 n/a n/a 107 47 148 316 8,456 We are a significant international investor in Egypt where we operate mobile services with 38.7 million customers as of 31 March 2016. We also provide communications services to Egyptian businesses. We own 54.9% of Vodafone Egypt (the remaining stake is owned by Telekom Egypt) and entered the market in 1998 through the award of a mobile licence. We also operate a large technology shared services centre in Egypt which provides IT and customer support to companies across the Group as a whole. Economic contributions have increased year on year mainly due to an increase in revenue. Number of legal entities 7 Legal entities • Misrfone Trading Company LLC • Vodafone Egypt Telecommunications S.A.E. • Sarmady Communications • Vodafone International Services LLC • Starnet • Wateaneya Telecommunications S.A.E. • Vodafone Data

34 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Fiji Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 ------2014-15 n/a n/a 4 - - - - We disposed of our Fijian business in 2014-15. The direct tax contribution in 2015 includes the tax we paid to the Fijian Government arising from the disposal. Number of legal entities Nil – sold in 2014

Ghana Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 194 (66) 4 7 42 33 1,149 2014-15 n/a n/a 6 12 29 33 1,154 We are a significant international investor in Ghana where we operate mobile and fixed-line services with 7.9 million customers as of 31 March 2016. We also provide communications services to Ghanaian businesses. We own 70% of Vodafone Ghana (the remaining 30% is owned by the Ghanaian Government) and entered the market in 2008 through the acquisition of Ghana Telecom. Vodafone Ghana also provides mobile financial services through M-Pesa, enabling people unable to access traditional banking systems to benefit from money transfer, savings and credit services. Our business in Ghana operates in a market where the profits we can generate by providing the services described above to customers do not yet cover the cost of funding the business’s investment in building and running the required network and operations. Our indirect tax contributions have increased in the year as a result of higher revenues generated by an increase in customer numbers. Number of legal entities 4 Legal entities • Ghana Telecommunications Company Limited • National Communications Backbone Company Limited • Vodacom Business (Ghana) Limited • Vodafone Ghana Mobile Financial Services Limited

35 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

India Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 5,230 (226) 417 1,083 1,141 946 22,483 2014-15 n/a n/a 412 568 1,053 987 19,471 We are one of the largest international investors in India where we operate mobile and fixed-line services with 197.9 million customers as of 31 March 2016. We are also a significant provider of communications services to Indian corporate and public sector customers, from small and medium-sized enterprises and municipalities to national agencies, central government and multinational companies. We entered the market in 2007 through the acquisition of assets owned by Hutchison. Local rules limiting the extent to which non-Indian shareholders could own assets in certain sectors led to unavoidably complex ownership arrangements until 2013 when we were permitted to acquire the remaining interests held by minority investors and were then able to begin to rationalise our overall corporate structure in India – a process which continues. The tax treatment of the 2007 acquisition is the focus of an ongoing dispute with the Indian Government which is explained here. We also operate large technology shared service centres in India which provide specialist back-office and technology support to companies across the Group as a whole. In 2012, we established a financial services business to bring the M-Pesa mobile money transfer service to India. We also own 42% of Indus Towers, one of the world’s largest mobile transmission tower companies which provides the passive infrastructure for the radio network for Vodafone India and two of its competitors. During the year we completed a restructuring and simplification of our Indian operating business which resulted in reducing eight operating companies into two operating companies through a merger process. Our business in India operates in a challenging environment and incurred a loss in 2015-16 as the costs of spectrum, investment in our networks and the interest costs incurred with local Indian banks exceeded the profit we make from providing our services to customers. Our 2015-16 non-tax contribution was higher than in the prior year as a consequence of a spectrum auction in 2015-16 which increased government receipts in that year. Number of legal entities 26 Legal entities • AG Mercantile Company Private Limited • Mobile Commerce Solutions Limited • SMMS Investment Private Limited • Vodafone India Services Private Limited • Cable & Wireless Global (India) Private • MV Healthcare Services Private Limited • Telecom Investments India Private • Vodafone Mobile Services Limited Limited • Nadal Trading Company Private Limited Limited • Vodafone Mpesa Limited • Cable & Wireless Networks India • ND Callus Info Services Private Limited • UMT Investments Limited • Vodafone Towers Limited Private Limited • Omega Telecom Holdings Private • Usha Martin Telematics Limited • Vodafone Technology Solutions Limited • Connect (India) Mobile Technologies Limited • Vodafone Business Services Limited Private Limited • Plustech Mercantile Company Private • Vodafone Global Services Private • Indus Towers Limited Limited Limited • Jaykay Finholding (India) Private Limited • Scorpio Beverages Private Limited • Vodafone India Limited

36 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Kenya Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 495 164 71 10 104 85 1,703 2014-15 n/a n/a 61 11 92 95 1,637 We are one of the largest international investors in Kenya, where our associate Safaricom (40% owned by Vodafone) operates mobile services with 25.2 million customers as of 31 March 2016. Safaricom also provides communications services to Kenyan corporate and public sector clients. Vodafone entered the Kenyan market in 2000 through the acquisition of our stake in Safaricom. Our investment is owned and managed by our Kenyan holding company. Other legal entities include the companies responsible for the M-Pesa mobile money service. M-Pesa was initially launched in Kenya and it is now a mainstay of the country’s financial system, used by millions of Kenyans every day. Tax contributions are higher in 2015-16 than in the previous year on account of an increase in the number of customers in the year. Number of legal entities 4 Legal entities • M-Pesa Holding Co. Limited • Safaricom Limited • Vodacom Business (Kenya) Limited • Vodafone Kenya Limited

Lesotho Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 50 19 5 2 2 10 188 2014-15 n/a n/a 2 2 2 10 170 Vodacom is the largest mobile operator in Lesotho. Over the last three years, Vodacom Lesotho has invested more than £28 million to improve and modernise the network and services relied on by 1.4 million customers as of 31 March 2016. Vodacom Lesotho (Pty) Limited is a subsidiary of the South Africa-based Vodacom Group Limited, through Vodacom International Holdings Pty Limited, which owns 80% of the company. The remaining interest in Vodacom Lesotho is owned by Sekhametsi Enterprises (Pty) Limited. Vodacom entered Lesotho in 1996 through the award of a mobile licence. Vodacom Lesotho also provides mobile financial services through M-Pesa, enabling people unable to access traditional banking systems to benefit from money transfer, savings and credit services. Number of legal entities 1 Legal entities • Vodacom Lesotho (Pty) Limited

37 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Mozambique Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 184 14 3 8 12 49 437 2014-15 n/a n/a 3 7 8 87 387 Vodacom is the second largest mobile operator in Mozambique. Over the last three years, Vodacom has invested more than £185 million to improve and modernise the networks and services relied on by its 4.8 million customers as of 31 March 2016. Vodacom Mozambique – VM SA – is a subsidiary of the South Africa-based Vodacom Group Limited, which owns 85% of the company. The remaining interest is owned by various minority shareholders. Vodacom entered Mozambique in 2003 through the award of a mobile licence. Vodafone M-Pesa SA provides mobile financial services – including mobile money transfer and savings and credit services – to people unable to access traditional banking systems. Number of legal entities 2 Legal entities • VM SA • Vodafone M-Pesa SA

New Zealand Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 900 (4) 48 8 75 108 2,883 2014-15 n/a n/a 9 50 82 129 3,134 We are a significant international investor in New Zealand where we operate mobile, fixed-line and TV services with 2.8 million customers as of 31 March 2016. We are also a significant provider of communications services to New Zealand corporate and public sector customers. We entered the market in 1998 through the acquisition of BellSouth’s New Zealand operations, and in 2012 we acquired the TelstraClear fixed-line and TV business. Our 2014-15 direct tax contributions were lower than the prior year as a result of our tax liabilities being offset by a refund of tax paid to the tax authorities in previous years. In June 2016, we announced our intention to merge our New Zealand mobile and fixed-line business with Sky Network Television Limited to create a leading integrated telecommunications and media group in the country. The transaction is currently awaiting regulatory approval. Direct tax contributions have increased in 2015-16 due to withholding taxes being paid on the re-financing of Vodafone New Zealand’s debt. Non-tax contributions declined as there was a spectrum auction in 2014-15. Number of legal entities 5 Legal entities • TNAS Limited • TSM NZ Limited • Vodafone Mobile NZ Limited • Vodafone New Zealand Limited • Vodafone Next Generation Services Limited

38 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Qatar Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 386 (86) <1 4 4 73 541 2014-15 n/a n/a - 2 - 101 514 We own 23% of Vodafone Qatar; the Qatar Foundation owns 27% and the remaining shares are publicly held with a listing on the Qatar Exchange. Vodafone Qatar operates mobile and fixed-line services with 1.5 million customers as of 31 March 2016. We entered the market in 2009 through the award of a mobile licence. We incurred a loss in Qatar during 2015-16 as the profits we earn from providing the services mentioned above to our customers do not yet cover the depreciation cost of our licences and our network. Number of legal entities 2 Legal entities • Vodafone and Qatar Foundation L.L.C • Vodafone Qatar Q.S.C.

South Africa Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 3,041 787 255 18 184 432 5,231 2014-15 n/a n/a 291 14 216 485 4,988 Vodafone owns 65% of the Vodacom Group; the remaining 35% is publicly owned through a listing on the Johannesburg Stock Exchange. Vodacom is one of Africa’s largest public companies and owns our operating businesses in the DRC, Lesotho, Mozambique, South Africa and Tanzania. The large majority of Vodacom’s revenues are derived from its biggest operating company, Vodacom South Africa (Pty) Limited, which was founded in 1994. In the South African market, Vodacom is the largest mobile operator and provides mobile and fixed-line services to over 43 million customers as of 31 March 2016. Vodafone acquired a majority interest in Vodacom Group in 2009. Over the last three years, Vodacom has spent £1.2 billion to improve and modernise its network over the same period, in turn contributing positively towards economic development and job creation. Vodacom’s tax contributions in 2015-16 are in line with those in 2014-15 in South African Rand but are lower in Pounds Sterling reported terms as a consequence of currency fluctuations. Vodacom Group owns several holding companies in South Africa – its country of domicile – as well as an insurance business which provides services to companies across the Vodacom Group. There are a number of dormant companies with no active role in either Vodafone Group or Vodacom Group. We struck off a number of previously dormant companies in the year as part of a rationalisation of our legal entities in South Africa. Number of legal entities 27

39 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

South Africa (continued) Legal entities • Cable and Wireless Worldwide South Africa (Pty) Limited • Vodacom Insurance Company (RF) Limited • Centriq Insurance Company (Pty) Limited • Vodacom International Holdings (Pty) Limited • GS Telecom (Pty) Limited • Vodacom Life Assurance Company (RF) Limited • Jupicol (Pty) Limited • Vodacom Payment Services (Pty) Limited • Mezzanine Ware (Pty) Limited (RF) • Vodacom Properties No.1 (Pty) Limited • Motifpros 1 (Pty) Limited • Vodacom Properties No.2 (Pty) Limited • Number Portability Company (Pty) Limited • Vodafone Holdings (SA) (Pty) Limited • Scarlet Ibis Investments 23 (Pty) Limited • Vodafone Investments (SA) (Pty) Limited • Storage Technology Services (Pty) Limited • Waterberg Lodge (Pty) Limited • Vodacom (Pty) Limited • Wheatfields Investments 276 (Pty) Limited • Vodacom Business Africa Group (Pty) Limited • Wheatfields Investments No 261 (Pty) Limited • Vodacom Financial Services (Pty) Limited • X-Link Communications (Pty) Limited • Vodacom Group Limited • Yebu Yethu Limited • Vodacom Insurance Administration Company (Pty) Limited

Tanzania Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 288 19 59 10 36 67 541 2014-15 n/a n/a 65 8 46 73 525 Vodacom is the largest mobile operator in Tanzania with 12.4 million customers as of 31 March 2016. Over the last three years, we have invested around £199 million to modernise the networks and services relied on by our customers. Vodacom Tanzania is a subsidiary of the South Africa-based Vodacom Group Limited, which owns 82% of the company. The remaining interest in Vodacom Tanzania is owned by Mirambo Limited. Vodacom Group Limited also has a 49% stake in Mirambo Limited though Cavalry Holdings Limited. Vodacom entered the market in 2000 through the award of a mobile licence and also provides mobile financial services through M-Pesa, offering mobile money transfer, savings and credit services to people unable to access traditional banking systems. Number of legal entities 5 Legal entities • Gateway Communications Tanzania Limited • Vodacom Tanzania Limited • Mirambo Limited • Vodacom Tanzania Limited Zanzibar • M-Pesa Limited

40 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Turkey Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 2,212 (39) 301 860 424 353 3,397 2014-15 n/a n/a 287 209 430 343 3,359 We are a significant international investor in Turkey where we operate mobile and fixed-line services with 22.5 million customers as of 31 March 2016. We are also a significant supplier of communications services to Turkish corporate and public sector customers. We entered the market in 2005 following our acquisition of the assets of Telsim. We have a holding company which owns our Turkish operating business. We also operate a technology R&D centre which provides specialist expertise to companies across the Group as a whole. We incurred a loss in Turkey during 2015-16 as the profits we earn from providing the services mentioned above to our customers do not cover the depreciation cost of our licences and our network, or the interest costs of the financing of the purchase of those licences and network. Our 2015-16 non-tax contributions include the payments made to acquire a spectrum licence following an auction in the year. Number of legal entities 8 Legal entities • Vodafone Bilgi Ve İletişim Hizmetleri A.Ş. • Vodafone Net İletişim Hizmetleri A.Ş. • Vodafone Dagitim Hizmetleri A.Ş. • Vodafone Teknoloji Hizmetleri A.Ş. • Vodafone Elektronik Para Ve Ödeme Hizmetleri A.Ş. • Vodafone Telekomunikasyon A.Ş. • Vodafone Holding A.Ş. • Vodafone Mobile Operations Limited

Enterprise sales and marketing locations Angola Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 3 <1 <1 - <1 <1 7 2014-15 n/a n/a - - <1 - 7 Vodacom Business Limitada is an enterprise-focused ICT subsidiary of the Vodacom Group through Vodacom Business Africa Group (Pty) Limited (VBA). VBA provides a range of communications services – from mobile and fixed-line connections through to Machine-to-Machine and cloud computing services – to Vodafone’s and Vodacom’s large corporate and multinational customers with a presence across Africa. Number of legal entities 1 Legal entities • Vodacom Business Limitada

41 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Austria Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 <1 <1 <1 - - <1 - 2014-15 n/a n/a <1 - - - Note 1 Our local legal entity provides marketing, sales and client support for Vodafone’s large corporate and multinational customers with an operating presence in the country. Number of legal entities 1 Legal entities • Vodafone Enterprise Austria GmbH

Belgium Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 <1 (1) 1 - <1 <1 17 2014-15 n/a n/a 1 - 1 <1 16 Our local legal entity provides marketing, sales and client support for Vodafone’s large corporate and multinational customers with an operating presence in the country. We also have a legal entity which acts as our representative office in engaging with Brussels-based European institutions. Number of legal entities 2 Legal entities • Ipergy Communications NV • Vodafone Belgium SA/NV

Brazil Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 <1 (1) <1 - <1 - 3 Our local legal entities provide marketing, sales and client support for Vodafone’s large corporate and multinational customers with an operating presence in the country. We also have a company supporting our automotive IoT business, which was acquired under the transaction with Cobra Group (now Vodafone Automotive) in Italy, in 2014. Number of legal entities 3 Legal entities • Cobra de Brasil Servicos de Telematica Limitada • Datora Mobile Telecommunicações SA • Vodafone Servicos Empresariais Brasil Limitada

Note 1: In 2014-15 we were not able to identify the employees in Austria, Denmark and South Korea separately from those in the central Group functions. 42 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Cameroon Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 5 1 <1 <1 <1 1 29 2014-15 n/a n/a <1 <1 <1 <1 29 Vodacom Business Cameroon SA is an enterprise-focused ICT subsidiary of the Vodacom Group through Vodacom Business Africa Group (Pty) Limited (VBA). VBA provides a range of communications services – from mobile and fixed-line connections through to Machine-to-Machine and cloud computing services – to Vodafone’s and Vodacom’s large corporate and multinational customers with a presence across Africa. Number of legal entities 1 Legal entities • Vodacom Business Cameroon SA

Canada Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 - <1 <1 - - - 3 Our local legal entity provides marketing, sales and client support for Vodafone’s large corporate and multinational customers with an operating presence in the country. Number of legal entities 1 Legal entities • Cable & Wireless Canada Incorporated

China Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 6 <1 <1 - 1 - 24 2014-15 n/a n/a <1 - <1 <1 24 Our local legal entity provides marketing, sales and client support for Vodafone’s large corporate and multinational customers with an operating presence in the country. We also operate a company supporting our automotive IoT business, which was acquired under the transaction with Cobra Group (now Vodafone Automotive) in Italy, in 2014. Number of legal entities 3 Legal entities • Cable & Wireless Communications Technical Services (Shanghai) Co. Limited • Vodafone China Limited • Cobra (Beijing) Automotive Technologies Co, Limited

43 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Denmark Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 - <1 <1 - <1 <1 - 2014-15 n/a n/a <1 - <1 <1 Note 1 Our local legal entity provides marketing, sales and client support for Vodafone’s large corporate and multinational customers with an operating presence in the country. Number of legal entities 1 Legal entities • Vodafone Enterprise Denmark A/S

France Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 17 7 1 - <1 7 69 2014-15 n/a n/a 2 - 1 3 14 Our local legal entity provides marketing, sales and client support for Vodafone’s large corporate and multinational customers with an operating presence in the country. We operate a company supporting our automotive IoT business which was acquired under the transaction with Cobra Group (now Vodafone Automotive) in Italy, in 2014. We also have a dormant company which no longer plays an active role in the Group. Number of legal entities 3 Legal entities • Vodafone Automotive France S.A.S • Vodafone Enterprise France S.A.S • Vodafone Automotive Telematics Development S.A.S

Hong Kong Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 46 (7) <1 <1 - - 78 2014-15 n/a n/a <1 - - 3 79 Our local legal entities provide marketing, sales and client support for Vodafone’s large corporate and multinational customers with an operating presence in Hong Kong. Number of legal entities 4 Legal entities • Vodafone Enterprise Hong Kong Limited • Vodafone Global Enterprise (Hong Kong) Limited • Vodafone Enterprise Global Network HK Limited • Vodafone China Limited (Hong Kong)

Note 1: In 2014-15 we were not able to identify the employees in Austria, Denmark and South Korea separately from those in the central Group functions. 44 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Ivory Coast Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 2 <1 - - - <1 9 2014-15 n/a n/a <1 - <1 <1 7 Vodacom Business Côte d’Ivoire s.a.r.l. is an enterprise-focused ICT subsidiary of the Vodacom Group through Vodacom Business Africa Group (Pty) Limited (VBA). VBA provides a range of communications services – from mobile and fixed-line connections through to Machine-to-Machine and cloud computing services – to Vodafone’s and Vodacom’s large corporate and multinational customers with a presence across Africa. Number of legal entities 1 Legal entities • Vodacom Business Côte d’Ivoire s.a.r.l.

Japan Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 3 1 <1 - <1 - 21 2014-15 n/a n/a <1 - <1 1 12 Our local legal entities provide marketing, sales and client support for Vodafone’s large corporate and multinational customers with an operating presence in the country. We also operate a company supporting our automotive IoT business which was acquired under the transaction with Cobra Group (now Vodafone Automotive) in Italy, in 2014. Number of legal entities 3 Legal entities • Vodafone Automotive Japan K.K. • Vodafone Japan K.K. • Vodafone Global Enterprise (Japan) K.K.

Mexico Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 - <1 - - - - 3 2014-15 n/a n/a <1 - <1 - 2 Our local legal entity provides marketing, sales and client support for Vodafone’s large corporate and multinational customers with an operating presence in the country. Number of legal entities 1 Legal entities • Vodafone Global Enterprise Mexico S.de R.L. de C.V.

45 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Nigeria Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 32 (3) 4 1 4 4 196 2014-15 n/a n/a 1 2 3 5 194 Vodacom Business Africa (Nigeria) Limited is an enterprise-focused ICT subsidiary of the Vodacom Group through Vodacom Business Africa Group (Pty) Limited (VBA). VBA provides a range of communications services – from mobile and fixed-line connections through to Machine-to-Machine and cloud computing services – to Vodafone’s and Vodacom’s large corporate and multinational customers with a presence across Africa. Number of legal entities 3 Legal entities • C & W Worldwide Nigeria Limited • Vodacom Business Africa (Nigeria) Limited • Spar Aerospace (Nigeria) Limited

Russia Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 1 <1 <1 <1 <1 <1 18 Our local legal entities provide marketing, sales and client support for Vodafone’s large corporate and multinational customers with an operating presence in the country. We also operate a company supporting our automotive IoT business, which was acquired under the transaction with Cobra Group (now Vodafone Automotive) in Italy, in 2014. Number of legal entities 3 Legal entities • Cable & Wireless CIS Svyaz LLC • Autoconnex Limited • Vodafone Global Enterprise Russia LLC

Sierra Leone Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 <1 <1 - - - <1 3 2014-15 n/a n/a <1 - <1 <1 3 VBA International (SL) Limited is an enterprise-focused ICT subsidiary of the Vodacom Group through Vodacom Business Africa Group (Pty) Limited (VBA). VBA provides a range of communications services – from mobile and fixed-line connections through to Machine-to-Machine and cloud computing services – to Vodafone’s and Vodacom’s large corporate and multinational customers with a presence across Africa. Number of legal entities 1 Legal entities • VBA International (SL) Limited

46 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Singapore Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 47 2 1 <1 <1 6 238 2014-15 n/a n/a <1 - <1 8 194 Our local legal entities provide marketing, sales and client support for Vodafone’s large corporate and multinational customers with an operating presence in Singapore. Number of legal entities 4 Legal entities • Bluefish Apac Communications Pte Limited • Vodafone Enterprise Regional Business Singapore Pte Limited • Vodafone Enterprise Global Network Pte Limited • Vodafone Enterprise Singapore Pte Limited

South Korea Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 12 <1 <1 <1 <1 - 14 2014-15 n/a n/a <1 - <1 <1 Note 1 Our local legal entity provides marketing, sales and client support for Vodafone’s large corporate and multinational customers with an operating presence in South Korea. We also operate a company supporting our automotive IoT business which was acquired under the transaction with Cobra Group (now Vodafone Automotive) in Italy, in 2014. Number of legal entities 2 Legal entities • Vodafone Automotive Korea Limited • Vodafone Global Enterprise South Korea Limited

Sweden Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 <1 <1 <1 - <1 <1 2 2014-15 n/a n/a <1 - <1 <1 2 Our local legal entity provides marketing, sales and client support for Vodafone’s large corporate and multinational customers with an operating presence in the country. Number of legal entities 1 Legal entities • Vodafone Enterprise Sweden AB

Note 1: In 2014-15 we were not able to identify the employees in Austria, Denmark and South Korea separately from those in the central Group functions. 47 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Switzerland Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 30 <1 <1 <1 <1 <1 20 2014-15 n/a n/a <1 - 1 5 3 Our local legal entity provides marketing, sales and client support for Vodafone’s large corporate and multinational customers with an operating presence in the country. We also operate a company supporting our automotive IoT business which was acquired under the transaction with Cobra Group (now Vodafone Automotive) in Italy, in 2014. Number of legal entities 2 Legal entities • Vodafone Automotive Telematics SA • Vodafone Enterprise Switzerland AG

Taiwan Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 - - <1 <1 - - - Our local legal entity provides marketing, sales and client support for Vodafone’s large corporate and multinational customers with an operating presence in the country. Number of legal entities 1 Legal entities • Vodafone Global Enterprise Taiwan Limited

Ukraine Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 <1 <1 <1 - - <1 - Our local legal entity provides marketing, sales and client support for Vodafone’s large corporate and multinational customers with an operating presence in the country. Number of legal entities 1 Legal entities • LLC Vodafone Enterprise Ukraine

48 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

United States of America Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 43 (13) (24) 1 18 12 579 2014-15 n/a n/a 4 <1 14 9 506 Our local legal entities provide marketing, sales and client support for Vodafone’s large corporate and multinational customers with an operating presence in the country. In 2015, we also launched a Vodafone-branded US mobile service for our multinational customers. This is a mobile virtual network operator (MVNO) service which runs on the T-Mobile US network; Vodafone does not own or operate the physical network used to connect customers. Our 2015-2016 direct tax contributions include refunds of US state taxes. We had paid these amounts in earlier years as part of the Verizon Wireless disposal, some of which were due back to us on the finalisation of the state tax liability for that year. Number of legal entities 5 Legal entities • Bluefish Communications Inc. • Vodafone Americas Virginia Inc. • Cable & Wireless a-Services, Inc. • Vodafone US Inc. • Cable & Wireless America Systems Inc.

Zambia Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 9 (1) <1 - - 2 180 2014-15 n/a n/a 1 <1 1 3 199 AfriConnect (Zambia) Limited is an enterprise-focused ICT subsidiary of the Vodacom Group through Vodacom Business Africa Group (Pty) Limited (VBA). VBA provides a range of communications services – from mobile and fixed-line connections through to Machine-to-Machine and cloud computing services – to Vodafone’s and Vodacom’s large corporate and multinational customers with a presence across Africa. Number of legal entities 1 Legal entities • AfriConnect (Zambia) Limited

49 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Other non-operating assets Cayman Islands Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 - <1 <1 - - - - 2014-15 n/a n/a - <1 - - - Our legal entity in the Cayman Islands is a legacy of the transaction with Hutchison in 2007 which led to what is now Vodafone India, as explained in the India section of this Report. Hutchison owned the assets in India indirectly via a Cayman Islands holding company. In its 2012 ruling, the Indian Supreme Court examined the Cayman Islands entity established by Hutchison (and subsequently acquired by Vodafone) and concluded that it had not been established to avoid tax. Under Vodafone’s ownership, the Cayman Islands holding company has no income and plays no role in reducing the taxes payable by our Indian operations or by the Group. Number of legal entities 1 Legal entities • CGP Investments (Holdings) Limited

Guernsey Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 - <1 - - - - - 2014-15 n/a n/a - - - - - Our legal entities in Guernsey are a consequence of prior acquisitions. These holding companies play no role in reducing the taxes payable by the Group. Number of legal entities 5 Legal entities • FB Holdings Limited • VBA Holdings Limited • Le Bunt Holdings Limited • VBA International Limited • Silver Stream Investments Limited

50 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Jersey Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 - <1 - - - - - 2014-15 n/a n/a - - - - - We have a number of legal entities in Jersey. Eight of these holding companies are subject to tax in either the UK or the Netherlands. Their overall tax contributions are therefore included within the numbers disclosed for those two countries. We also have one legacy holding company in Jersey which receives a limited amount of dividend income (which is paid from post-tax profits) and which plays no role in the financing of the Group. Number of legal entities 9 Legal entities • Aztec Limited • Vizzavi Finance Limited • Vodafone International 2 Limited • Vodafone Jersey Finance • Globe Limited • Vodafone Holdings (Jersey) Limited • Vodafone Jersey Dollar Holdings Limited • Vodafone Jersey Yen Holdings Unlimited • Plex Limited

Luxembourg Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 164 1,379 6 <1 11 35 317 2014-15 n/a n/a 19 <1 7 14 305 Our legal entities in Luxembourg conduct financing, procurement and roaming activities on behalf of the Group as a whole. Our local legal entities also provide marketing, sales and client support for Vodafone’s large corporate and multinational customers with an operating presence in the country. Further details of our Luxembourg subsidiaries are set out earlier in the Report. As explained earlier in the Report, Luxembourg provides a large proportion of the Group’s funding to many of our businesses worldwide. Under transfer pricing rules, all such arrangements must operate under commercial ‘arm’s length’ principles, which are externally benchmarked and verified: in simple terms, the interest and fees associated with this funding activity must be comparable to those levied by an external financial institution. In addition, Luxembourg hosts our global procurement and roaming subsidiaries which serve Vodafone businesses worldwide as strategic centres of excellence and which also operate as profit centres in their own right, charging third parties (such as Partner Markets operators) fees on a commercial basis for a variety of services, including the provision of specialist roaming management and procurement services to third parties. Our 2015-16 direct tax contribution was lower than the previous year as in 2014-15 the Luxembourg authorities issued routine tax assessments for prior years as well as for the year in question. Number of legal entities 11 Legal entities • Vodafone Enterprise Luxembourg S.A. • Vodafone Investments Luxembourg S.a.r.l. • Vodafone Asset Management Services S.a.r.l. • Vodafone Roaming Services S.a.r.l. • Vodafone International 1 S.a.r.l. • Vodafone Luxembourg 5 S.a.r.l. • Vodafone Payment Solutions S.a.r.l. • Vodafone Enterprise Global Businesses • Vodafone International M S.a.r.l. • Vodafone Luxembourg S.a.r.l. • Vodafone Procurement Company S.a.r.l. S.a.r.l.

51 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Mauritius Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 26 (28) 1 - <1 - 5 2014-15 n/a n/a <1 <1 <1 <1 5 Our legal entities in Mauritius are a legacy of prior acquisitions, predominantly the acquisition of the Hutchison assets in 2007 which led to what is now Vodafone India (as explained above in the Cayman Islands section). Mauritius is a common base for multinational investment into India and Africa, and a number of assets acquired by Vodafone and Vodacom in the past have involved assuming ownership of Mauritius-based companies. These entities play no role in reducing the taxes payable by our African or Indian operations (or the operations of the Group) and many of these are now dormant. Vodacom’s Mauritius-based companies also provide HR and wholesaling services to other members of the Vodacom Group. Number of legal entities 16 Legal entities • Al-Amin Investments Limited • CGP India Investments Limited • Prime Metals Limited • Vodafone Telecommunications (India) • Array Holdings Limited • Euro Pacific Securities Limited • Trans Crystal Limited Limited • Asian Telecommunications Investments • Mobile Wallet VM1 • VBA (Mauritius) Limited • Vodafone Tele-Services (India) Holdings (Mauritius) Limited • Mobile Wallet VM2 • Vodacom International Limited Limited • CCII (Mauritius) Inc. • Mobilvest • Vodafone Mauritius Limited

Morocco Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 ------2014-15 ------We have one legacy legal entity in Morocco. This is now dormant. Number of legal entities 1 Legal entities • Vodafone Maroc S.a.r.l.

52 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Seychelles Revenue (£m) Profit before tax (£m) Direct revenue Direct revenue Indirect revenue Capital investment Direct employment contribution: contribution: contribution (£m) Tax (£m) Non-tax (£m) (£m) 2015-16 ------2014-15 ------We acquired two legal entities in the Seychelles when Vodacom Group increased its stake in Vodacom Tanzania in 2014. These entities have no income and play no part in the financing of either Vodacom Group or Vodafone Group. Number of legal entities 2 Legal entities • Cavalry Holdings Limited • East Africa Investments (Mauritius) Limited

53 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Appendices

Appendix 1: Country-by-country Appendix 4: Types of taxation 60 contributions table 55 Appendix 5: Glossary 61 Appendix 2: Key Group financials Appendix 6: Assurance and reconciliation 58 statement 62 Appendix 3: Verizon Wireless 59

54 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Appendix 1

Country-by-country contributions table The table below sets out the data for five of the most relevant indicators of Vodafone’s total overall contribution to the public finances and wider economies of the countries within which we operate and this year also includes revenue and profit before tax (PBT) figures for each of our businesses. The source data is predominantly drawn from information included within the publicly available Vodafone Group Annual Report 2016, the public accounts of the Group’s listed operating company subsidiaries and the accounts of various non-listed Group operating company subsidiaries. This Report has been prepared using data presented in the Vodafone Group Plc Annual Report for 2016. The data in the Annual Report for that year was presented in Pounds Sterling which is, therefore, the currency used in this Report. Vodafone Group now reports its financial performance in Euros which will also be the currency in the next version of this Report to be published during the 2017-18 financial year. The Vodafone Group public accounts are certified by the Group’s external auditors and the public accounts of the Group’s listed operating company subsidiaries are certified by those companies’ external auditors. Additional data is subject to assurance in line with the approach taken for other metrics disclosed in the Vodafone Group Sustainable Business Report 2015-16. The assurance for this Report was conducted by BDO.

Direct revenue Direct revenue Indirect revenue Revenue PBT (ex dividends) contribution: taxation contribution: non-tax contribution Capital investment Direct employment FY15-16 FY15-16 FY15-16 FY14-15 FY15-16 FY14-15 FY15-16 FY14-15 FY15-16 FY14-15 FY15-16 FY14-15 £m £m £m £m £m £m £m £m £m £m Europe Albania 84 5 4 8 6 8 5 8 18 23 425 411 Czech Republic 366 19 12 10 17 8 47 44 74 83 1,735 1,823 Germany 7,863 (347) 189 206 1,371 <1 854 1,026 1,907 2,203 16,034 15,568 Greece 621 17 16 26 6 104 145 154 93 75 2,118 2,228 Hungary 312 8 20 19 16 <1 86 88 66 61 3,366 2,949 Ireland 747 (13) 19 25 15 9 82 69 168 166 1,272 1,155 Italy 4,542 464 123 96 203 23 517 734 1,190 1,154 7,384 6,864 Malta 68 115 4 6 2 2 9 8 12 12 343 321 Netherlands 1,384 (64) 48 20 - - 177 196 250 295 3,598 3,480 Portugal 716 23 26 37 23 23 78 92 257 268 1,483 1,433 Romania 558 39 24 26 17 13 71 72 97 103 3,993 3,705 Spain 3,679 (268) 139 199 60 100 245 279 862 850 6,006 6,050 United Kingdom 6,719 (486) 257 320 34 28 721 726 1,237 1,309 17,965 16,681 TOTAL 27,659 (488) 882 995 1,770 318 3,038 3,494 6,231 6,603 65,722 62,666

55 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Direct revenue Direct revenue Indirect revenue Revenue PBT (ex dividends) contribution: taxation contribution: non-tax contribution Capital investment Direct employment FY15-16 FY15-16 FY15-16 FY14-15 FY15-16 FY14-15 FY15-16 FY14-15 FY15-16 FY14-15 FY15-16 FY14-15 £m £m £m £m £m £m £m £m £m £m Africa, Middle East and Asia-Pacific Australia 867 (108) 13 13 16 31 38 28 118 209 1,593 1,695 Democratic Republic 285 (8) 35 30 38 20 35 34 63 78 634 691 of Congo Egypt 1,202 293 120 107 67 47 166 148 299 316 8,373 8,456 Fiji - - - 4 ------Ghana 194 (66) 4 6 7 12 42 29 33 33 1,149 1,154 India 5,230 (226) 417 412 1,083 568 1,141 1,053 946 987 22,483 19,471 Kenya 495 164 71 61 10 11 104 92 85 95 1,703 1,637 Lesotho 50 19 5 2 2 2 2 2 10 10 188 170 Mozambique 184 14 3 3 8 7 12 8 49 87 437 387 New Zealand 900 (4) 48 9 8 50 75 82 108 129 2,883 3,134 Qatar 386 (86) <1 - 4 2 4 - 73 101 541 514 South Africa 3,041 787 255 291 18 14 184 216 432 485 5,231 4,988 Tanzania 288 19 59 65 10 8 36 46 67 73 541 525 Turkey 2,212 (39) 301 287 860 209 424 430 353 343 3,397 3,359 TOTAL 15,336 760 1,331 1,292 2,129 981 2,261 2,170 2,636 2,944 49,152 46,182 Enterprise sales and marketing locations Angola 3 <1 <1 - - - <1 <1 <1 - 7 7 Austria <1 <1 <1 <1 - - - - <1 - - Note 1 Belgium <1 (1) 1 1 - - <1 1 <1 <1 17 16 Brazil <1 (1) <1 n/a - n/a <1 n/a - n/a 3 n/a Cameroon 5 1 <1 <1 <1 <1 <1 <1 1 <1 29 29 Canada - <1 <1 n/a - n/a - n/a - n/a 3 n/a China 6 <1 <1 <1 - - 1 <1 - <1 24 24 Denmark - <1 <1 <1 - - <1 <1 <1 <1 - Note 1 France 17 7 1 2 - - <1 1 7 3 69 14 Hong Kong 46 (7) <1 <1 <1 - - - - 3 78 79 Ivory Coast 2 <1 - <1 - - - <1 <1 <1 9 7 Japan 3 1 <1 <1 - - <1 <1 - 1 21 12

56 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Direct revenue Direct revenue Indirect revenue Revenue PBT (ex dividends) contribution: taxation contribution: non-tax contribution Capital investment Direct employment FY15-16 FY15-16 FY15-16 FY14-15 FY15-16 FY14-15 FY15-16 FY14-15 FY15-16 FY14-15 FY15-16 FY14-15 £m £m £m £m £m £m £m £m £m £m Enterprise sales and marketing locations – continued Mexico - <1 - <1 - - - <1 - - 3 2 Nigeria 32 (3) 4 1 1 2 4 3 4 5 196 194 Russia 1 <1 <1 n/a <1 n/a <1 n/a <1 n/a 18 n/a Sierra Leone <1 <1 - <1 - - - <1 <1 <1 3 3 Singapore 47 2 1 <1 <1 - <1 <1 6 8 238 194 South Korea 12 <1 <1 <1 <1 - <1 <1 - <1 14 Note 1 Sweden <1 <1 <1 <1 - - <1 <1 <1 <1 2 2 Switzerland 30 <1 <1 <1 <1 - <1 1 <1 5 20 3 Taiwan - - <1 n/a <1 n/a - n/a - n/a - n/a Ukraine <1 <1 <1 n/a - n/a - n/a <1 n/a - n/a United States of America 43 (13) (24) 4 1 <1 18 14 12 9 579 506 Zambia 9 (1) <1 1 - <1 - 1 2 3 180 199 TOTAL 260 (14) (15) 10 2 2 24 20 32 39 1,513 1,302 Other non-operating assets Cayman Islands - <1 <1 - - <1 ------Guernsey - <1 ------Jersey - <1 ------Luxembourg 164 1,379 6 19 <1 <1 11 7 35 14 317 305 Mauritius 26 (28) 1 <1 - <1 <1 <1 - <1 5 5 Morocco ------Seychelles ------TOTAL 190 1,350 7 19 <1 <1 11 7 35 14 322 310 GLOBAL TOTAL 43,445 1,608 2,204 2,316 3,900 1,302 5,335 5,691 8,934 9,601 116,709 110,460

Notes to table The table above includes all contributions from countries where the Group has a legal entity presence. ‘Global enterprise’ includes all jurisdictions in which we have separate legal entities supporting our Vodafone Global Enterprise (VGE) sales, marketing and client support activities except where the contributions from VGE are in countries shown in the Europe or AMAP regions in which case the VGE element is included within those lines. We also have VGE entities in Argentina, Bahrain, Chile, Saudi Arabia and the United Arab Emirates where there is either no contribution data for 2015-16 or the entities were set up after 31 March 2016. The global total direct employment number includes employees in our non-controlled entities who are excluded from the numbers in the Annual Report. A reconciliation between our Annual Report revenue and profit before tax figures and the data in the table above can be found on page 58. For prior year country-by-country tables, click here for 2015, here for 2014, here for 2013 and here for 2012.

Note 1: In 2014-15 we were not able to identify the employees in Austria, Denmark and South Korea separately from those in the central Group functions. 57 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Appendix 2 Key Group financials

2015-16 2014-15 Revenue (£m) 40,973 42,227 Adjusted operating profit (£m) 3,117 3,507 Free cash flow (£m) 1,013 1,088 Employees 107,667 101,443 Market capitalisation (as at 31 March) (£m) 59,200 58,400 Group mobile customers (million) 462.3 454.2 For more detailed information about our financial performance in 2015-16, see our Annual Report. Reconciliation of revenue and profit before tax as reported here to the Vodafone Group 2016 results

Revenue Profit before tax Capital £m £m expenditure £m Figures from Annual Report 2016 pages 30, 31 and 37* 40,973 1,846 8,599 Include revenue from associates and joint ventures not included in revenue in our accounts 2,054 - - Add intra-company items eliminated from the Group results 417 3 - Exclude Group items which do not affect local taxable profits - (241) - Include capital expenditure from associates and joint ventures not included in our accounts 469 Other differences 0 (0) (3) Figures from Tax Report 2016 data (and country-by-country tables) 43,445 1,608 8,934

Please note that while we are able to reconcile the revenue and profit before tax figures as reported in the Vodafone Group Annual Report 2016 to those reported here, it is not possible to do this for the contributions made to governments as these are disclosed on a cash-paid basis for the reasons we have set out earlier in the Report. * as reported in the Vodafone Group Annual Report for the year ended 31 March 2016, published in June 2016.

58 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Appendix 3 Verizon Wireless In February 2014, we completed Our US group has always been owned by one the sale of our US group – whose of Vodafone’s European holding companies, principal asset was Vodafone’s 45% based in the Netherlands, which also owns many of our other international assets. Our shareholding in Verizon Wireless – to European holding company sold the US group our US joint venture partners, Verizon to Verizon Communications in its entirety Communications Inc. The total once the rationalisation and reorganisation, consideration was $130 billion. described above, had been completed. Our US group structure was predominantly The sale of our US group was not taxable a legacy of prior mergers and acquisitions under standard US tax rules: under the US tax dating back more than 14 years. In addition code, US tax is not imposed on these types to the Verizon Wireless shareholding, our US of sales of shares by non-US-based entities. group also owned a range of minority non-US Such treatment is also consistent with US tax interests acquired in the merger with AirTouch treaties. The sale was also not taxable under Communications Inc. in 1999, together with standard Dutch rules: long-established tax law other non-US interests acquired over time. in the Netherlands provides a participation It would not have made sense to leave exemption on dividends received and capital those legacy non-US interests (which gains arising from the sale of shares by were not included in the sale to Verizon any Dutch company, whatever the size of Communications) stranded in US jurisdiction the company or the size of the transaction once the sale of our US group was completed. involved. A number of other EU countries We therefore undertook a rationalisation and have similar provisions in place, all of reorganisation of the US group structure prior which are designed to stimulate long-term to completion of the transaction to ensure corporate investment and consequential that those non-US interests were held by broader benefits for the wider economy. Vodafone outside the United States. That While the UK is not a relevant jurisdiction reorganisation gave rise to an estimated for tax purposes given the locations of the £2.2 billion US tax liability under standard buyer (the United States) and the seller (the US tax rules; a sum which was paid to the Netherlands), under rules established in 2002, US tax authorities in 2014. the UK has similar shareholding disposal exemptions to those of the Netherlands.

59 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Appendix 4 Types of taxation The table below provides an illustrative overview of the types of taxation paid by Vodafone operating companies around the world every year. Direct taxation Fuel duty Occupation of public space tax Non-taxation-based fees Game tax Parking tax Advertisement tax Annual government fee Garbage tax PAYE settlements Airtime excise tax Antitrust authority contributions Homologation tax Railway development levy Betting duty Carrier fees Import duty Real estate/property/landlord tax Business profits tax Chamber of commerce fees Innovation contribution Real estate transfer tax Business rates Cost contribution fund payments Insurance premium tax Rehabilitation contribution Capital gains tax Frequency fees Interconnect tax Shop opening authorisation tax City services levy Identity management fee International inbound call termination surtax Social security tax Cleaning tax International Mobile Equipment Identity Irrecoverable value added tax and goods and Special communications tax Climate change levy (IMEI) number registration fees services tax Special consumption tax Commission levy Licence renewal fees Judicial tax Stamp duty land tax Communications services tax National copyright collecting fees Levy contributions Tax on non-biodegradable SIM cards Company car tax Network usage fees Local business tax Tax on prize programmes Construction tax Non-IMEI number registration fees Measuring equipment tax Tax on public domain / fixed lines Consumption tax Proceeds from revenue sharing agreements Minimum alternative tax Technology tax Corporation tax Radio link fees Mobile telecoms services value added tax Transfer tax Donations tax Spectrum auction receipts Mobile telecoms value added tax (higher rate) Turnover tax Economic activity tax Spectrum management fees Municipal and city rates Universal service tax Education tax / Educational infrastructure tax Telecoms authority contributions Municipal business tax Vocational training contribution Employers’ national insurance contributions Telecoms levy Municipal sewage levy Withholding tax Employers’ Provident Fund contribution Telecoms licence fees Municipal tax on immovable property Workers’ compensation insurance levy Employers’ tax on pension plans Usage fees Municipal waste tax Environment tax Universal communications Municipal water tax Environmental product fee service access fund National fiscal stabilisation levy Equipment approvals duty Universal social charge National health insurance levy Expatriate tax Wireless connection fees Net wealth tax Fixed asset tax Wireless usage fees Numbering tax Fringe benefit tax

60 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Appendix 5 Glossary Advance tax agreements Deferred taxation tax payers in each jurisdiction. The type of Taxable presence These can arise when there are complex This is an accounting concept whereby the information exchanged could relate to bank This describes the activities that take place transactions, unclear tax regulations future tax consequences of past transactions accounts held by tax payers or to sharing of in a country that require the filing of a tax or substantial values involved, and tax are reflected in the accounts of a company. country-by-country reports prepared under return and possibly the payment of taxes in authorities seek to provide companies of all A deferred tax liability would mean that more the BEPS initiative. that country. sizes with both formal and informal rulings tax will be due in the future as a result of past Holding company Tax haven and clearances in order to reduce uncertainty. transactions, whereas a deferred tax asset This is a type of company whose principle means there will be less tax due in the future. There are a number of different definitions Arms-length principle purpose is to hold and manage investments in of the term ‘tax haven’. At its simplest, the This is the principle of pricing of a transaction Depreciation other companies or joint ventures. term is relative: if the tax regime in Country between related parties as if the parties were This is the amount included on the profit Profit before tax A has a lower headline or effective tax rate acting as independent entities. and loss account of a company each year This represents the profits we earn after the than Country B, then through the eyes of Artificial arrangements to reflect the reduction in value of capital deduction of all costs. This number forms the the people of Country B, Country A could be expenditure, e.g. network equipment. considered to be a ‘tax haven’. These are where transactions, activities or basis on which we pay corporation tax. More arrangements are undertaken without any Diverted profits tax information can be found here. A more nuanced definition of the term ‘tax significant commercial purpose. See our tax A tax was introduced by the UK from haven’ focuses on national tax policies which Profit shifting have the effect of incentivising activities that risk management policy for our perspective April 2015 to tax circumstances where This is the term used to describe the artificial on artificial arrangements. multinationals either contrive arrangements are ring-fenced from the local economy, may arrangements under which companies move be specific to individual companies rather Base erosion so as not to meet the definition of a taxable profits from one jurisdiction to another presence in the UK, or which artificially than available to all market participants, This is the term used to describe the jurisdiction in order to minimise tax payments. divert UK profits to an entity in a lower tax and may be largely artificial in nature and reduction in a country’s overall tax revenues jurisdiction for purely tax reasons. Revenue designed purely to minimise tax. as a consequence of the fluid movement This represents the total income earned Transfer pricing of corporate activity and funds between Double taxation by a company and includes the amounts This refers to the setting of the price for goods different jurisdictions. This is the taxation of the same income twice earned from selling services to customers or by two or more different tax jurisdictions. and services sold between related entities BEPS other Group companies, income received for within a Group. Transfer pricing should be This is the OECD’s project designed to address Effective tax rate royalties for use of brands, and interest income. based on the arms-length principle. It is artificial base erosion and profit shifting This is the ratio of tax expense included in the State aid used to ensure that profits are allocated to (BEPS). The initiative intends to ensure that financial statements compared to the profits This generally arises in the EU where a the countries where the relevant economic multinationals are taxed ‘where their economic shown in the same financial statements. member state, through a government body, activity takes place. activities take place and value is created’. Exchange of information has granted some form of advantage to an This refers to the exchange between tax individual or company. authorities of certain information relating to

61 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

Appendix 6 BDO LLP Assurance Statement Tax and our total contribution to public finances

Independent Assurance Statement • Indirect revenue contribution • Accuracy of group level data collation • the extent to which Vodafone Group Tax to Vodafone Management • Capital investment and presentation. has reviewed the data provided to them by the local country team. The online “Tax and our total contribution to • Direct employment Summary of work performed: public finances” document for 2015-16 3. Reviewed the basis upon which the Our responsibility in performing our assurance 1. The procedures we performed were (the “Report”) has been prepared by identified data reported by the ten activities is to the management of Vodafone based on our professional judgement and the management of Vodafone who Vodafone local country tax teams Group only and in accordance with the terms of included the steps outlined below: sampled (ensuring coverage of Operating are responsible for the collection and reference agreed with them. We do not accept • Interviewed identified members of companies, Enterprise sales and marketing presentation of the information within it. or assume any responsibility for any other Vodafone Group Tax with responsibility locations and Non-Operating companies) The management of Vodafone are also purpose or to any other person or organisation. for managing, collating and reviewing the has been captured, reviewed and responsible for the design, implementation Any reliance any such third party may place on data for the Report to; consolidated to assess whether the data and maintenance of internal controls relevant the Report is entirely at its own risk. to the preparation of the report, so that it is • review the relevant documentation and has been collected, consolidated and Our assurance engagement has been planned guidance provided to local teams. reported accurately. free from material misstatement, whether and performed in accordance with the • examine the processes and controls at 4. Sought explanations for material due to fraud or error. revised version of the International Standard Group level in managing, collating and differences between the quantitative data Our responsibility, in accordance with on Assurance Engagements (ISAE) 3000, reviewing the data for the Report. presented in the previous tax section in the Vodafone management’s instructions, is Assurance Engagements Other than Audits or 2014-15 Report and this Report (noting to carry out a limited assurance review of Reviews of Historical Financial Information – • review the underlying processes that figures for Revenue and Profit Before the data included in the “Our contribution, ‘ISAE3000 Revised’1. and documentation supporting the country by country” section of the Report and qualitative statements in the Report. Tax were not included in the previous Specifically, the subject matter in the Report). to ensure that the statements made in the Report has been evaluated against the 2. Interviewed a sample of ten Vodafone local 5. Reviewed and challenged supporting remainder of the Report are not inconsistent following criteria: country tax teams to review: evidence from Vodafone Group Tax with that data and our discussions with • adherence to and understanding of • Coverage of the most material issues. in relation to selected qualitative tax Vodafone. Our work involved a review of data the guidance provided by Vodafone • Consistency of the statements made with statements made within the Report. relating to: Group Tax. underlying information that we reviewed 6. Reviewed the Report for consistency • Revenue • the processes for ensuring that all local and points raised through discussions with between sections. • Profit Before Tax Vodafone teams. country taxes are included within the reporting to Vodafone Group Tax. • Direct revenue contribution: taxation • Completeness of the data in terms of • Direct revenue contribution: other non-tax coverage of material reporting entities.

1 International Standard on Assurance Engagements 3000 (Revised) is effective for assurance reports dated on or after December 15, 2015 62 Vodafone Group Plc | Tax and our total contribution to public finances 2015-16

BDO LLP Assurance Statement continued

7. Compared the data in the Report to the systems and controls in place at Group level This is the fifth time that Vodafone has sought Our assurance team relevant disclosures in the Vodafone for the collation of capital investment data and to report a detailed level of tax data in the Our assurance team has been drawn from our Group‘s Consolidated Financial Statements direct employment data where this information absence of any formal requirement. tax network, which undertakes engagements for the year ended 31 March 2016. has been extracted from the Group’s financial We make the following comments in relation similar to this with a number of significant UK 8. Consider, review and challenge as management and related systems. to how the data required for the Report has and international businesses. Our assurance appropriate any significant changes in the Our conclusions been gathered, reviewed and consolidated: team has provided no other services relating 2015-16 report from the content of the Based on our review of the collection, • There is a formal and documented to the collection and consolidation of the previous year’s document. consolidation and presentation of revenue; methodology in place that sets out the data and the statements made in the Report. Limitations of our review Profit Before Tax; direct revenue contribution: process for data collection. We conducted our work to express a limited taxation; direct revenue contribution: other • Local teams were provided with sufficient BDO LLP assurance conclusion. The procedures non-tax; indirect revenue contribution; direct time and improved guidance to enable Manchester performed in a limited assurance engagement employment data; and capital investment data: effective collation of country data. vary in nature and timing from, and are 1. Nothing has come to our attention that • The local reporting template is intuitive February 2017 less in extent than for a reasonable causes us to believe that the data included to use and has sufficient granularity of assurance engagement. within the scope of our review has not been captions to support quality and consistency Consequently the level of assurance obtained materially collated and presented properly over the data collection process. in a limited assurance engagement is at Group level; and • The Group consolidation template substantially lower than the assurance that 2. Nothing has come to our attention that provides a clear audit trail to the local would have been obtained had we performed causes us to believe that the statements reporting templates. a reasonable assurance engagement (such as made within the scope of our review are Our independence the statutory audit of financial statements) inconsistent with the tax data included in and we do not therefore express a reasonable the Report or our discussions with BDO LLP provide independent assurance assurance opinion. Vodafone teams. services in relation to the “Tax and our total contribution to public finances” document for Our review of tax and non-tax contribution data Observations from our work 2015-2016 (the “Report”). was limited to the subject matter identified Our observations and areas for improvement above from the ten jurisdictions sampled. We have implemented measures to ensure will be raised in a report to Vodafone that we are in compliance with the applicable As part of our work, we placed reliance on management as appropriate. Any such independence and professional competence Vodafone’s controls at local country and observations do not affect our conclusions on rules as articulated by the IFAC Code of Ethics Group level for managing and reporting the the Report set out above. for Professional Accountants and ISQC1. tax and non-tax contribution information, Vodafone has demonstrated a positive with the degree of reliance informed by the intention to engage its stakeholders and the results of our review of the effectiveness of public in relation to the tax and economic these controls. We have not sought to review contribution that the business makes.

63